Oil and gas comprised 76.4% of Timor-Leste’s gross domestic product (GDP) in 2013 (RDTL GDS
2015) and provided more than 93% of state revenues in 2014.1 Most of the money from selling off
non-renewable petroleum wealth has been saved in the Petroleum Fund — a sovereign wealth fund
containing $17 billion. People expect the Fund to finance state activities after the oil and gas fields are
exhausted, which could happen within five years, but the Fund may be empty by 2025. Timor-Leste
has about a decade to use its finite oil resources to underpin long-term prosperity and development.
This article gives an overview of the consequences of Timor-Leste’s reliance on its limited oil and gas
reserves, focusing on its impacts on economics and decision-making. It explores how effectively
Timor-Leste’s Petroleum Fund, established in 2005 with extensive guidance from international
agencies, can prevent or ameliorate some of the most serious consequences of the resource curse —
the negative impacts of non-renewable resource wealth on citizens of most countries which depend on
exporting petroleum and mineral wealth.
I draw on research and analysis by the Timor-Leste Institute for Development Monitoring and
Analysis, also known as La’o Hamutuk, an independent Timorese civil society organisation founded in
2000 to support the country’s political and economic sovereignty, from the perspective of social and
economic justice. It analyses reports and proposals from government, international agencies and other
sources, compares them with observations and other data, and uses its findings to enhance public and
leaders’ understanding of the context and likely consequences of policy options. In addition to using
published documents, La’o Hamutuk consults with officials, experts, practitioners, and researchers. It
also advocates for policies and programs that will equitably benefit Timor-Leste citizens both now and
in the future.
Published statistics and international comparisons involving Timor-Leste are often inaccurate or
inconsistent, frequently confusing total GDP with non-oil GDP, even though it is four times larger (La’o
Hamutuk 2014b; cf. RDTL GDS 2013, 2014a and 2015d). This makes it challenging to understand whether contradictions and retroactive revisions come from improved data or methodology, political motivation, or agencies’ reluctance to differ with the government