RE: Timor Government statement today2 Jul 2024 11:38
More immediately, however, Timor-Leste is looking for investment, and loans, ahead of what the IMF has bluntly referred to as the country’s “fiscal cliff.” At current rates of spending, Timor-Leste will run out of money.
Since 2007, successive governments have spent between two and three times the sustainable levels of withdrawals, making up the difference from the fund’s capital base. With no further income from the now depleted oil fields, the Petroleum Fund has around US$16 billion which, at current rates of expenditure, will see it fully depleted by the early 2030s.
Prime Minister Gusmao had intended the US$50 billion Greater Sunrise LNG field – his signature project – to pick up much of the economy’s shortfall and to provide a base for future economic growth, based on local processing and exports. This plan, for which development costs are around US$16-18 billion, was always fanciful, given the country’s lack of infrastructure and skills, as well as the technical challenge of a Greater Sunrise pipeline having to cross the 3,300 metre deep Timor Trough.
Ramos-Horta threatened that his country would go to China to develop the field if Australia did not comply with its wishes. China’s main development investor, the Export-Import Bank, has already rejected the proposal without provisions by Timor-Leste that it would provide the capital to finance its on-shore facility. This would be around the same amount that the country has remaining in its Petroleum Fund.
In the face of dwindling funds and no prospect of new sources of revenue, Timor-Leste has agreed with an IMF plan to reduce spending, although this will include stinging cuts that will directly impact its economy.
To balance some of the economic pain the country is facing, Timor-Leste is looking for investment partners and China’s already significant presence in Timor-Leste’s non-oil economy is likely to grow. Similarly, Timor-Leste will start to borrow for infrastructure projects, notably under China’s Belt and Road Initiative, as agreed in September. The country’s international balancing act may thereby succumb to the forces of economic circumstance.
Time to get Chuditch flowing them some revenues, long before , if it happens Sunrise/Tasi plans est 2030/31
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