Democratic Republic of Timor-Leste: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Timor-Leste
IMF Staff Country Reports, September 26, 2025
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- Democratic Republic of Timor-Leste: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Timor-Leste
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- Published: September 26, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229026673.002
Overview and key findings
- Timor-Leste’s financial buffers and favorable demographics provide an opportunity to develop its economy.
- The economy remains under-diversified despite impressive progress since independence.
- Fiscal and external imbalances are large.
- The Petroleum Fund’s (PF) balance stood at 939 percent of non-oil GDP in 2024, making Timor-Leste’s Net Foreign Asset position one of the highest in the world as a share of the domestic economy.
- Oil and gas production has ceased.
- Large withdrawals from the PF to finance fiscal deficits, should they continue, would lead to its full depletion by the end of the 2030s.
- Timor-Leste has one of the youngest populations in the Asia-Pacific region, holding promise for future growth.
Risks and sustainability concerns
- Continued large fiscal deficits financed by PF withdrawals would exhaust the Petroleum Fund by the end of the 2030s.
- High Net Foreign Asset position relative to domestic economy currently masks vulnerabilities stemming from the cessation of oil and gas production and persistent fiscal deficits.
Development opportunities and policy implications
- Leverage favorable demographics (one of the youngest populations in the Asia-Pacific region) to support sustainable growth and economic diversification.
- Address under-diversification of the economy to reduce reliance on petroleum wealth.
- Contain fiscal deficits to avoid rapid depletion of the Petroleum Fund and preserve external and fiscal buffers.
International Monetary Fund. Democratic Republic of Timor-Leste: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Timor-Leste, IMF Staff Country Reports 2025, 278 (2025), Country Report No. 2025/278, Pages: 77, Volume: 2025, Issue: 278, Stock No: 1TLSEA2025001, DOI: https://doi.org/10.5089/9798229026673.002, ISBN: 9798229026673, ISSN: 1934-7685.
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