Dili, Jan. 29, 2026 (Lusa) - The Government of Timor-Leste will propose changes to the public debt regime in order to diversify sources of financing and reduce dependence on the Petroleum Fund, Timorese Prime Minister Xanana Gusmão announced on Thursday.
"Public debt refers to loans we take out from other countries. We began resorting to loans during the fourth government, as it was considered better to borrow than to withdraw money directly from the Petroleum Fund," said Xanana Gusmão.
According to the head of government, resorting to loans allows for gradual spending and protects the Petroleum Fund from rapid depletion.
"In this way, we pay interest, but in a controlled manner, and we maintain the Petroleum Fund with a sufficient amount to continue investing," explained the prime minister after his weekly meeting with Timorese President José Ramos-Horta.
On Tuesday, the Timorese government approved a draft bill to amend the Public Debt Regime to diversify the sources of financing for the General State Budget, reducing the heavy dependence on the Petroleum Fund.
"The proposal allows for the scope of public debt issuance to be broadened, no longer limiting it exclusively to the financing of strategic infrastructure, in order to enable the use of instruments such as Treasury bonds to finance general state expenditure," reads the statement from the Cabinet.
According to the Timorese government, the amendment also aims to "align the national public debt regime with the practices adopted in most countries and create conditions for more sustainable management of public finances in the medium and long term".
The government justifies the initiative with "budgetary sustainability, preparing the country for the progressive decline in revenues from the Petroleum Fund and ensuring greater stability in the financing of essential public policies".
"We all know that Bayu-Undan has been depleted and that the Petroleum Fund is no longer growing as it did before. Investments have also declined, waiting for the Greater Sunrise project to meet our needs," said Xanana Gusmão.
Located 150 kilometres from Timor-Leste and 450 kilometres from Darwin, the Greater Sunrise project has been involved in a stalemate, with Dili advocating the construction of a gas pipeline to the south of the country and Woodside, the consortium's second largest partner, leaning towards a connection to the existing facility in Darwin.
The impasse led the joint venture to request a conceptual study, which was prepared by the British company The Wood Group, confirming the feasibility of developing Greater Sunrise in Timor-Leste.
"The Timor-Leste Liquefied Natural Gas (TLNG) option stands out for its lower operating costs and, by allowing better overall direct and indirect returns for Timor-Leste, will have a major socio-economic impact on the country," says the Timorese government.
The permanent maritime border agreement between Timor-Leste and Australia stipulates that Greater Sunrise, a shared resource, will have to be divided, with 70% of the revenues going to Timor-Leste if the pipeline is built to the south coast, or 80% if processing takes place in Darwin.
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