Timor-Leste Petroleum Fund

The Timor-Leste Petroleum Fund, established in 2005, is a sovereign wealth fund for the Democratic Republic of Timor-Leste, also known as East Timor. The fund was created to manage the country's revenue from petroleum resources to ensure long-term fiscal sustainability and intergenerational equity. The primary goal is to transform Timor-Leste's finite oil and gas wealth into a lasting source of income and savings for current and future generations.

The Timor-Leste Petroleum Fund operates under the principles of transparency, good governance, and prudent investment management. It is governed by the Petroleum Fund Law, which sets out the operational framework, investment rules, and reporting requirements. The Central Bank of Timor-Leste (BCTL) is responsible for the day-to-day management of the fund, while the Ministry of Finance oversees the overall policy and strategic direction.

The fund's assets are primarily invested in low-risk, fixed-income securities, such as government bonds, to ensure capital preservation and generate a stable income stream. A portion of the assets may be invested in equities to enhance long-term returns. The investment strategy is guided by a benchmark portfolio determined by the Ministry of Finance in consultation with the BCTL.

The Petroleum Fund Law mandates that petroleum revenues be deposited directly into the fund, and any withdrawals must be approved by the Timor-Leste Parliament. Withdrawals are limited by the Estimated Sustainable Income (ESI) rule, which calculates the maximum sustainable amount that can be withdrawn each year based on the fund's balance and projected future petroleum revenues. This ensures that the fund's assets are maintained for the long term, providing a stable source of revenue for the government's budget and reducing the country's reliance on volatile oil and gas prices.

Transparency is a key principle of the Timor-Leste Petroleum Fund, and regular reports are published to keep the public informed about the fund's performance, management, and operations. These reports include the Quarterly Report from the BCTL, the Annual Report from the Ministry of Finance, and the Independent Audit Report, which is conducted by an external auditor.