印度尼西亚
中国（大陆）
日本
新加坡
澳大利亚
中国台湾省
印度With the end of gas activity, growth is now based solely on public spending
After the lifting of the state of health emergency and the reopening of the borders, which enabled the non-gas economy to recover in 2022, followed by the closure in the first half of 2023 of the country’s only gas field which accounted for 70% of GDP, growth in 2024 will be based solely on public spending and private consumption. Despite the disappearance of the gas income from the depletion of the Bayu-Undan field, the wealth of the Petroleum Fund will continue to be used for consumption and major public investment. In particular, major infrastructure projects will continue to be developed, including the extension of Presidente Nicolau Lobato international airport and the development plan for the port of Dili, with a view to increasing its passenger capacity. In addition, given the persistent health problems (malnutrition, poor access to drinking water, etc.) and the weakness of the education system, public spending on human capital is likely to be substantial.
While hydrocarbons used to account for around 95% of the country's exports, the depletion of previously exploited resources will lead to a fall in exports, which will not be able to resume until the Greater Sunrise gas field development project sees the light of day. The development of the field, discovered in 1974, has been the subject of fierce debate given its geographical location, 150 km from the Timorese coastline but also 450 km from Darwin, Australia. While a 2018 agreement between the two countries establishes a maritime boundary favourable to Timor, the question of where the gas will be liquefied and how the associated revenues will be shared is the ongoing subject of heated negotiations between Timor, the Australian company Woodside Energy and Japan's Osaka Gas. Initially, Australia strongly supported the idea of liquefaction on its territory, but its environmental legislation has since led it to adopt a neutral stance. East Timor presented liquefaction on the island as an economic necessity for the country, which would also enable costs to be reduced. As a result, the start of production is not expected within the forecast period. The moderation in world energy and food prices will help to slow imported inflation, which in turn will support the recovery in private consumption. The latter, coupled with the need for capital goods linked to investment projects, will increase imports, with the rise in volume outstripping the fall in value.
Abysmal twin deficits financed by the Oil Fund
The already wide public deficit has deepened considerably with the decline and eventual end of gas production, which provided up to 80% of traditional revenues, while public spending continues to be the main driver of the economy. Most of its funding comes from the Petroleum Fund (PF), followed by international aid. Although withdrawals from the Fund are normally limited to 3% of its assets, a level corresponding to the Fund's expected revenues, excess withdrawals are authorised and exercised. While withdrawals have been thrice the level considered reasonable since 2007, the Fund's management is all the more unsustainable as its revenues have dried up. However, such management has made it possible to maintain a low level of debt.
The trade balance, which until 2022 benefited from gas exports, is now showing a yawning deficit due to the depletion of the only gas field in production and increased imports, despite the expected rise in coffee exports. The deficit in the balance of services will be reduced slightly by stronger recovery in tourism, but this reduction will weigh little against the abysmal trade deficit. The PF, together with an increase in external public debt, which is entirely concessional and multilateral, and remains low, will finance the deficit.
The end of cohabitation and growing regional integration
Nobel Peace Prize winner José Ramos-Horta, who was President between 2007 and 2012 and is now supported by the National Congress for Timorese Reconstruction (CNRT), returned to power as President in the 2022 presidential election, winning 62.1% of the votes in the second round against the FRETILIN incumbent. The CNRT, led by the independence hero, the country’s first President and former Prime Minister Xanana Gusmão, won 31 of the 65 seats at stake in the May 2023 legislative elections. Following the signing of a government agreement with the Democratic Party, the country's period of cohabitation has come to an end, which should stabilise political life and facilitate decision-making, especially as the elections were conducted smoothly and transparently.
On the geopolitical front, the country is continuing the rapprochement with its neighbours. After numerous disputes over the maritime border with Australia, the two countries adopted a treaty in 2019 resolving the issue of the Greater Sunrise oil and gas field in favour of East Timor. The allocation of the bulk of the field's revenues to Timor-Leste has eased tensions. A decision should be taken before 2024 with the Australian company Woodside Energy as to how the field will be exploited, and in particular where the gas will be refined. A giant step forward was also taken with ASEAN's in principle agreement to admit the country to the organisation in November 2022, more than 11 years after its application. The 42nd ASEAN Summit in May 2023 tabled a roadmap and endorsed the organisation's support for the country's efforts.
