Press Release No. 13/360

Press Release: IMF-Timor Leste High-Level Conference Debates Harnessing Natural Resource Wealth for Inclusive Growth and Economic Development

September 25, 2013

The Government of Timor-Leste and the International Monetary Fund (IMF) have jointly organized a high-level conference in Dili, Timor-Leste on September 17-19. The conference, entitled “Harnessing Natural Resource Wealth for Inclusive Growth and Economic Development” was held in collaboration with the Asian Development Bank (ADB), the World Bank (WBG), and Japan International Cooperation Agency (JICA).

The conference brought together more than 250 government ministers and senior officials, academics, and representatives of civil society and development partners from across Asia, Africa, Australia and the South Pacific, the Caribbean, and the Middle East to discuss international experience and best practices to achieve sustainable and inclusive economic growth and development in resource-rich low-income countries. Among the participants were representatives of the g7+ group of 18 fragile, post-conflict states, most of which are natural resource producers.

In his greetings to the participants of the conference, President Taur Matan Ruak called on the Government and development partners to help improve nutrition and education in Timor-Leste. The President affirmed that, process of the development had become the major challenge of the country; therefore nutrition and education were necessary to be improved.

In opening the conference, Timor-Leste Prime Minister Kay Rala Xanana Gusmao said that “We all have the enormous responsibility to ensure that the wealth from our natural resources is spent to improve the lives and opportunities of our people and build a foundation for our future; while at the same time preserving wealth for future generations.” Referring to the Strategic Development Plan 2011-2030, he said “Our vision is to transform our country from a low income nation to a country with upper-middle income levels by 2030, with a population that is secure, educated and healthy.” He added “We are proud that Timor-Leste was the first country in Asia, and the third country in the world, to comply with the Extractive Industry Transparency Initiative. This means that every dollar earned from our oil and gas resources is accounted for.”

“I trust that the outcomes of this conference will help us to improve our fiscal policy, and the design of our national public investment framework, to transform our nation through a stronger and diversified economy. Using our natural resources wisely will allow us to make sustainable structural changes to our country,” the Prime Minister said. “Economic growth by itself is for nothing if it does not support poverty reduction, job creation, better education and health services and the tackling of social exclusion.”

Mr. Anoop Singh, Director of the IMF Asia and Pacific Department, stressed the historic significance of the conference, especially with respect to the participation of the g7+ group of countries. He noted the particularly important role of fiscal policy in the economic management in natural resource rich countries, where the government typically plays a dominant role through its control of natural resources and associated income.

“I also want to emphasize the importance of decisions regarding the mining tax and other tax policies, as well as the composition of expenditures—including public investment. Saving mechanisms such as the role of sovereign wealth funds and the governance framework will have enormous consequences—not just for today, but also for future generations—with the potential to ensure successful development or alternatively to destabilize the economy,” Mr. Singh added. In addition, he said ”The IMF supports the g7+’s central aims of increased country ownership of policies and the special focus on conflict resolution and the building of appropriate state institutions as prerequisites for inclusive and sustainable growth.”

Mr. Hiroto Arakawa, Special Advisor, the JICA Research Institute noted “The natural resources sector has the potential to be a catalyst for industrialization. However, before investing in natural resources such as mining, comprehensive analysis should inform the decision makers on the impacts to the society, environment, and other sectors.” He said “It is also critically important to share the experiences of natural resource management. Malaysia is an excellent example of avoiding ‘Dutch Disease’ in terms of foreign exchange management and human resource development. These lessons are fundamental in shaping the partnership that JICA is developing with resource rich economies.” “As the Minister of Finance mentioned in the Summary Session of the conference, JICA’s on-going study on the future of labor force in Timor-Leste would be a significant step in our partnership,” Mr. Arakawa reiterated. .

The program of this conference and some of the speeches and presentations are available at: http://www.imf.org/external/np/seminars/eng/2013/timor/.