Subject: E Timor finmin sees growth, development
 
Interview-E Timor finmin sees growth, development

* GDP growth seen at 8 pct in 2009, 2010

* Inflation at 2 pct in 2009, 4 pct in 2010

* Govt to boost exports, infrastructure spending

By Sunanda Creagh

DILI, August 28 (Reuters) - East Timor's economy is forecast to grow 8 per cent in 2009 and in 2010, driven by government spending and measures to boost agricultural output, Finance Minister Emilia Pires told Reuters in an interview on Friday.

East Timor, one of the poorest countries in Asia, this month marks the tenth anniversary of its vote for independence from Indonesia, which invaded the former Portuguese colony in 1975.

Indonesia plundered East Timor's economy and committed human rights abuses, particularly in the run-up to independence, leaving behind an impoverished country with severe social and security problems. [ID:nJAK405468]

But the tiny, oil-rich -- if underdeveloped -- nation has proved relatively sheltered from the impact of the global economic crisis, growing 12.8 percent in 2008.

"The impact of the financial crisis on us has been very limited because we are not in the capital markets so we have been more or less isolated," she said.

"But it did have an impact on our revenue for oil because of the decline of price in oil, but that has now stabilised."

East Timor's Petroleum Fund, which invests the royalties from deals on oil and gas under the Timor Sea, is currently worth $5.1 billion and is expected to grow by $100 million per month if oil prices stay stable, Pires said.

The money is invested in U.S. Treasury bonds, but two months ago, $1 billion was invested in sovereign bonds from Australia, Japan and the United Kingdom, she said.

East Timor's non-oil exports are expected to reach just $10 million this year, and climb to $15 million in 2010, up from $1 million in 2008, she said.

"When you look at our normal trade, including the oil, then you have a really substantive trade surplus. If you take the oil out you will see a deficit," she said.

"This year, 2009, we expect to import about $440 million worth of goods and we aim to increase our exports to about $10 million. Last year it was $1 million."

AGRICULTURAL EXPORTS

One push is to boost coffee exports, and help farmers to process the beans domestically, she said. The government also wants to encourage cattle farming, and agricultural products such as vanilla and coconut oil.

"In the coffee industry, we are helping our farmers to get a bigger amount exported," Pires said, adding that the purchase of patrol ships, used to curb piracy, would also help increase output for the fishing sector.

"It is estimated we could get about $40 million a year just on fishing, that is what we are losing and that is the potential for exports," she said.

Pires identified poverty as the biggest problem facing East Timor, where the unemployment rate is around 40 percent, according to the World Bank.

"We need to invest in basic infrastructure, education, health so we can improve the quality of life of our people and ensure they do have some sort of purchasing power and this is exactly what we are doing at the moment," she said.

A new land law to be tabled in government soon will help address problems with land tenure that have so far thwarted infrastructure development, she said.

The government will give priority to roads, port development, and water as part of the infrastructure spending, she added.

"This is the year we say goodbye to conflict and hello to development," she said. (Reporting by Sunanda Creagh in Dili; Editing by Sara Webb)

 


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