## Democratic Republic of Timor-Leste: Selected Issues and Statistical Appendix

_IMF Staff Country Reports, February 28, 2007_

## Source details

**Canonical URL:** [Democratic Republic of Timor-Leste: Selected Issues and Statistical Appendix](https://www.imf.org/en/publications/cr/issues/2016/12/31/democratic-republic-of-timor-leste-selected-issues-and-statistical-appendix-20481)

## Other formats

- [Markdown version](/en/publications/cr/issues/2016/12/31/democratic-republic-of-timor-leste-selected-issues-and-statistical-appendix-20481/index.md)
- [Structured JSON version](/en/publications/cr/issues/2016/12/31/democratic-republic-of-timor-leste-selected-issues-and-statistical-appendix-20481/index.json)
- [Bundle manifest](/en/publications/cr/issues/2016/12/31/democratic-republic-of-timor-leste-selected-issues-and-statistical-appendix-20481/bundle-manifest.json)

## Bibliographic details
- Published: February 28, 2007
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451837346.002

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### Executive summary
- The paper assesses linkages between investment and growth observed in other countries to gauge the expected impact of increasing public investment in Timor-Leste.
- Key high-level conclusions:
  - The level of capital expenditure envisioned in the government’s strategy could significantly boost economic growth and reduce poverty.
  - The paper reviews major issues related to tax policy reform in Timor-Leste.
  - The paper discusses the current direction of Timor-Leste Petroleum Fund asset management and issues that might arise with eventual asset diversification.

### Public investment and growth
- Analytical focus:
  - Evidence from cross-country linkages between investment and growth is used to estimate expected impacts of higher public investment in Timor-Leste.
- Findings:
  - Increased public capital expenditure, at the levels envisioned in the government’s strategy, is assessed to have substantial positive effects on economic growth.
  - Projected growth effects are linked explicitly to potential poverty reduction outcomes.

### Tax policy reform
- Scope of review:
  - Major issues related to tax policy reform in Timor-Leste are examined.
- Themes covered:
  - Design and implications of income and capital gains taxes and income tax systems.
  - Revenue administration and reform considerations relevant for strengthening tax capacity and revenue mobilization.

### Timor-Leste Petroleum Fund (TLPF) asset management and diversification
- Analytical focus:
  - The current direction of TLPF asset management is described.
  - Potential issues associated with eventual asset diversification are discussed.
- Considerations highlighted:
  - Asset allocation and investment objectives for the TLPF.
  - Risks and operational issues that could arise during diversification of TLPF assets.

### Key takeaways for policymakers
- Public investment:
  - Pursuing the government’s envisioned capital expenditure program could materially boost growth and contribute to poverty reduction.
- Tax reform:
  - Addressing major tax policy and revenue administration issues is important to support sustainable public finances and effective use of increased investment.
- Sovereign wealth management:
  - Careful planning is needed for TLPF asset management and any diversification to manage risks and align with investment objectives.

*Democratic Republic of Timor-Leste: Selected Issues and Statistical Appendix, February 28, 2007*

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/democratic-republic-of-timor-leste-selected-issues-and-statistical-appendix-20481_