Top UN economist forecasts boom for East Timor

By Agence France-Presse, Updated: 3/30/2010

The tiny, impoverished nation of East Timor is on the cusp of an economic explosion that will eclipse even China in terms of growth, a top UN economist said Tuesday.

Jeffrey Sachs, the special adviser to the UN secretary-general told an audience at the national university that the government needed to be smart about how it spends billions of dollars in oil and gas revenues.

"I want to make a prediction right here -- you can hold me to it. Timor Leste will grow faster between 2010 and 2020, economically... than China," he said in a public lecture, using the country's formal name.

The leading economist and global development expert is scheduled to hold high-level meetings with UN representatives, senior officials and donors in Dili during his six-day visit.

He said Asia was "catching up very quickly" with developed economies and East Timor, one of the poorest countries in the world, would ride the regional wave to greater prosperity.

"Timor-Leste will accomplish this kind of convergence over the next generation, so what's happening in Asia will happen in this country very powerfully," he said.

Sachs told a packed house that extreme poverty could be eradicated if the government focused on investment in human capital, infrastructure and developing sectors such as tourism and agriculture.

East Timor has been on a rocky road since formal independence from Indonesia in 2002. More than half of all children under five are malnourished and about 40 percent of the population lives below the poverty line.

Sachs said the government of former independence fighter Prime Minister Xanana Gusmao needed to inject oil and gas revenues amounting to some five billion dollars into the economy.

"You don't need to buy US treasury bills," he said, criticising government policy.

"You need to invest in your own future, so rather than building up this big cash balance, better to use the funds to invest in infrastructure, human capital, agricultural modernization, hydrocarbon sector development and the other areas."

A New York Times bestseller, Sachs was the director of the UN's Millennium Project Millennium Development Goals between 2002 and 2006.

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