How long will the Petroleum Fund carry Timor-Leste?

Type Conference Paper - Timor-Leste Studies Association Conference, Dili
Title How long will the Petroleum Fund carry Timor-Leste?
Author(s)
Publication (Day/Month/Year) 2013
URL http://www.tlstudies.org/pdfs/TLSA Conf 2013/Volume 2 individual papers/vol2_paper28.pdf
Abstract
Oil and gas provided more than 95% of Timor-Leste state revenues2 and comprised 81% of GDP (RDTL
DGS 2013) in 2012. Income from exporting non-renewable petroleum wealth is channelled through the
Petroleum Fund, which contains US$16 billion. Many believe that the Fund will pay for state activities
after the oil and gas fields are exhausted, which could happen within six years, but the Petroleum Fund may
be empty by 2025.3 Timor-Leste has about a decade to use its finite oil resources to underpin long-term
prosperity and development.
As in all countries, decision-makers in Timor-Leste need solid information to develop sound
policies. Aspirations are essential, but planning should not rely on unrealizable dreams. This paper
describes a model that projects how long the Petroleum Fund will be able to finance state activities. The
model incorporates historical and projected data, shows the effects of external factors and policy decisions,
and tests different assumptions.
When Timor-Leste’s state revenues can no longer cover expenses, the nation will enter an
‘austerity’ phase, with drastic implications for the state and its citizens. This model explores when that will
happen and how severe it will be

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