East Timor Is Going For Broke As Oil Runs Out
East Timor could be bankrupt within a decade unless it takes urgent action to diversify its economy and reassess its fixation with mega-petroleum projects
East Timor was once seen as the poster child for developing nations. It had natural resources, a comprehensive legal framework governing their extraction and an oil fund. But without new sources of income the Southeast Asian state could be bankrupt as early as 2027 , research from Dili-based thinktank La’o Hamutuk shows.
The government’s finance ministry is more optimistic, forecasting that its sovereign wealth fund, derived from oil money, will stretch until 2032. But there seems to be some confusion among high-level ministers, including the Prime Minister, Rui Maria de Araújo, about the timelines, as Guteriano Neves, a Timorese post-graduate student at the Crawford School of Public Policy in Australia, highlights in his post Are We The Victims Of Our Own Fantasies?
Significantly, the fledgling nation is almost entirely dependent on petroleum revenues. But its oil and gas income peaked in 2012 and continues to fall. The ConocoPhillips-operated Bayu-Undan project – East Timor’s only producing field – has provided about $20 billion over the past 10 years, but the oil money has all but dried up as output is expected to stop sometime between 2020 and 2022.
Still East Timor’s government, which hopes to be reelected in 2017, recently issued a press release East Timor’s Economic Outlook Positive As Reforms Begin To Show Results and published a similar article East Timor Approaching 2017 Elections With Confidence.