Dili, May 21, 2026 (Lusa) - Timor-Leste's government has revised down its 2026 economic growth forecast to 4.3% in an amending budget proposal it submitted to parliament, which began public hearings on Thursday.

The government forecast gross domestic product (GDP) growth of 4.5% in the 2025 state budget, which it approved in late 2025.

“Growth should moderate slightly to 4.3% in 2026 as higher global fuel and food prices reduce real household incomes, compress business margins and weaken investment,” the proposal states.

Government data also shows that average annual inflation in the country will rise to 2.2% in 2026, up from 1.2% in 2025, due to “new inflationary pressures from imports.”

The government's proposed amendment increases the general state budget by $101.1 million (about €87 million), raising it from $2.291 billion (about €1.9 billion) to $2.392 billion (about €2.06 billion).

Authorities said the adjustment aims to mitigate the economic impact of rising international fuel prices, given the country's heavy reliance on imports, including food, which directly affects transport costs and domestic inflation.

The amending budget also aims to cover costs for Timor-Leste's presidency of the Community of Portuguese Language Countries and expenses related to the special administrative region of Oecussi.

The government will finance this spending increase without requiring transfers from the Petroleum Fund (the country's sovereign wealth fund).

MSE/LYT // AYLS

Lusa