22 May 2010

Petroleum Fund Law faces major revisions

Adapted from: http://laohamutuk.blogspot.com/2010/05/petroleum-fund-law-faces-major.html

For the last five years, Timor-Leste's Petroleum Fund has served our country well. Since it was created, oil revenues and the state budget have grown beyond expectations. With ambitious future plans, the Government is revising the Fund's investment strategy and amending the Law which created it. La'o Hamutuk believes that this has major implications for current and future generations, and should done carefully, with wide public discussion of all issues and decisions.

La'o Hamutuk has posted a new web page "Revising the Petroleum Fund Law" ( http://www.laohamutuk.org/Oil/PetFund/revision/10PFRevision.htm ) with background information, context, and links to many presentations from three recent workshops. We also describe changes being considered, some of which were publicly announced and others which the Government is discussing in secret.

La'o Hamutuk has obtained a January 2010 Discussion Paper circulating within the National Directorate of the Petroleum Fund in the Ministry of Finance. This paper has not been released and may not represent decisions already made, but it includes suggestions from the Investment Advisory Board, consultants and staff. The Discussion Paper presents options for significant changes to many parts of the Law, including transferring management from the BPA to the Ministry of Finance, reducing the independence of the Investment Advisory Board, removing most restrictions on investments, increasing the recommended annual expenditure from 3% to 5% of Timor-Leste's petroleum wealth, enabling the fund to be used as collateral for borrowing, and allowing some withdrawals without Parliamentary authorization. We have include a summary of the options discussed in the paper on our new web page.

In 2005, the Petroleum Fund Law was enacted with a unanimous vote of all parties in Parliament, and we hope that any changes this year will also receive support from across Timor-Leste's political and social spectrum. To do so, they must serve the long-term national interest, rather than the priorities of a particular party, generation, or economic class.

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