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Projected PF development
The PF balance is 16,634 million as of June 2014. This is an increase of 1,681 million from
the start of the year. The fund’s balance is expected to be 16,567.2 million by the end of
2014 after deducting the estimated withdrawal adopted by Parliament.
The current forecast, as shown in table 2.6.3.3.2, shows the total value of the fund to be
17,529.8 million by the end of 2015 and 19,070.8 million by the end of 2019.
Table 2.6.3.3.2: Estimated PF Savings 2011‐2016 m
2013 Actual
2014 Estimate
2015 Budget
2016 2017
2018 2019
Opening PF Balance
11,775.3 14,952.1
16,567.2 17,529.8
17,995.6 18,368.1
18,729.8
Petroleum Revenue
excluding PF Interest
3,041.8 1,705.0
1,374.3 1,212.2
1,073.5 800.3
657.6 PF
Interest, Net 864.9
813.0 915.8
966.2 1,002.7
1,035.9 1,060.3
Total Withdrawals
730.0 902.9
1,327.5 1,712.6
1,703.8 1,474.6
1,376.9
Closing PF Balance
14,952.1 16,567.2
17,529.8 17,995.6
18,368.1 18,729.8
19,070.8
Source: PF Administration Unit
Net of management and market revaluation
As discussed earlier, the current data shows that more than 70 of the petroleum wealth
from both Bayu‐Undan and Kitan is now in the form of the financial assets the PF. This
means that going forward the level of withdrawals from the fund and the return on its
investment would be the main driver of the size of the PF and hence the petroleum wealth.
2.7: Financing
2.7.1: Definition of Financing
Total budgeted expenditure is higher than domestic revenue for 2015. This results in a non‐
oil deficit domestic revenue minus expenditure which is financed by withdrawals from the
PF, loans and use of the cash balance. Table 2.7.1.1 shows the amount of each financing
item. The total amount of financing is equal to the non‐oil deficit. The 2015 State Budget is
therefore clearly showing how total expenditure will be financed from either domestic
revenue or financing items.
Financing items and domestic revenues have different economic impacts. Domestic revenue
is collected from taxes and charges paid by companies and individuals in Timor‐Leste. All
else being equal, the higher domestic revenue the less money these companies and
individuals have to spend and invest. Consequently Government spending paid for by
domestic revenue does not significantly increase overall demand in the economy; as the
increase in demand from spending is approximately equal to the decrease in demand from
companies and individuals who are paying tax.
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In contrast financing expenditures by withdrawing money from the PF increases the overall
level of demand within the economy. Financing expenditures from loans from international
organisations also increases demand in the year that loan financed spending occurs. There
will, however, be a negative impact on demand in the future when the Government begins
to repay the loan. An increase in demand, if not matched by an increase in ability of the
economy to produce goods, can cause higher inflation.
The Government has analysed the impact of the non‐oil deficit on demand, economic
growth and inflation. This analysis shows that the non‐oil deficit for 2015 to 2019 is
consistent with the strong, high quality economic growth.
Table 2.7.1.1: Financing m
2015 2016
2017 2018
2019 Total Financing
1,399.6 1,907.0
1,839.2 1,634.5
1,426.9
Estimated Sustainable Income ESI
638.5 632.8
615.4 597.8
586.6 Excess
Withdrawals from PF 689.0
1,079.7 1,088.3
876.8 790.2
Use of Cash Balance
2.1 0.0
0.0 0.0
0.0 Borrowing
Loans 70.0
194.4 135.5
159.9 50.0
Source: National Directorate for Economic Policy
2.7.2: ESI and Excess Withdrawals
