Oil funds to boost East Timor's economy

East Timor is hopeful that this year’s new government, coupled with increasing oil revenues, will finally uplift its stagnating economy. An estimated $644 million in profits from oil and gas is ready to be added to a $1 billion petroleum fund created in 2005, which is projected to grow at $1 billion a year for the next 20 years, providing a much-needed push for progress.

Eight years into independence from Indonesia, unemployment levels remain at 40 percent, literacy rate is at a mere 50 percent, and nearly half of the country’s 1 million population live on $1 a day or less.

Even with over $3 billion in foreign aid, funds for East Timor have been wanting to provide a significant economic boost to the country. The annual budget for national infrastructure, for example, only amounted to $1 million, while last year’s allocation for the local mayor of Baucau, the country’s second city, was a meager $800.

Experts blamed the leftist policies of now ousted Fretilin leader Mari Alkatiri for the economic slump, among them a centralized procurement system and deplorable government salaries.

Current Prime Minister Jose Ramos-Horta, who is running for president in today’s elections, remains steadfast in changing the tide in East Timor. “It is completely wrong for people to expect Timor Leste, after four or five years, should be successful in every aspect,” he remarked. Efforts must be made in recognizing strengths and weaknesses, Ramos-Horta said, such as outsourcing elements of the bureaucracy where local skills are lacking. “Why should I have an incompetent individual running our procurement when I could have a prominent British consultant do it for me,” he argued.

Source: East Timor sees oil cash easing aid reliance (The Financial Times)

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