Lao Hamutuk – Mon, 20 Aug 2007 11:06

Last week, the Timor-Leste Banking and Payments Authority (BPA) recently released the latest quarterly report for the Petroleum Fund, covering the period April-June 2007. The BPA press release follows below. The report is available from www.laohamutuk.org/Oil/PetFund/Reports/PFQR07q2en.pdf, and background and analysis on the Petroleum Fund since its inception is available at www.laohamutuk.org/Oil/PetFund/05PFIndex.htm. In summary, the end-of-June balance was US $1,394 million, up from $1,218 million at the end of March. The fund received $308 million in deposits from petroleum revenues during the quarter, and $140 million was withdrawn from the Fund to finance government activities.

Added to the $120 million withdrawn last March, this brings total withdrawals for the 2006-7 fiscal year to $260.07 million, $37,000 more than was budgeted in August 2006 for this fiscal year. However, most of this money has not been spent, but is held in banks and investments by the Government (as distinct from the Petroleum Fund). According to the quarterly Balance Sheets from the BPA (available from www.bancocentral.tl/en/balancesheet.asp), government assets held by the BPA (not including the Petroleum Fund) increased from $56.1 million to $248.0 million over the last six months. These non-PF assets held by the BPA earned interest at an annual rate of 2.05% during the last six months; in contrast, the Petroleum Fund earned interest during the same period at 3.63% per annum. Therefore, by transferring $192 million out of the Petroleum Fund and holding it in government accounts, Timor-Leste loses approximately $8,000 every day, enough money to employ about a thousand full-time workers.
- Charlie Scheiner, La'o Hamutuk
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Autoridade Bancária e de Pagamentos de Timor-Leste
Banking and Payments Authority of Timor-Leste
Ava Bispo Medeiros, PO Box 59, Dili, Timor-Leste
Tel. 1(670) 3 313 718, Fax. 1(670) 3 313 716
VIII Petroleum Fund Quarterly Report - Quarter ended 30 June 2007

PRESS RELEASE

The Banking & Payments Authority (BPA) of Timor-Leste today released the eight Quarterly Report of the Petroleum Fund of Timor-Leste showing that the Capital of the fund as of 30 June 2007 was $1,394.22 million compared with $1,217.98 million at the end of March 2007.
The report shows that the gross cash inflows during the quarter was US$308.26 million consist of the taxpayers contribution to the Fund was US$ 93.57 million and the royalties contribution of the TSDA was US$ 214.70 million.

The fund accrued interest was $11.45 million during the quarter, while the change in market value was negative $3.24 million.

The absolute return on the Fund for the quarter was positive 0.62%, equivalent to an annual return of 2.49%. The portfolio return for the quarter was 1 basis point lower than the benchmark return within the mandate.

An amount of US$140.07 million was transferred to the General State Budget as requested by the Ministry of Planning and Finance. An amount of US$157.2 thousands management fee has been deducted from the fund during the quarter.

The Petroleum Fund law specifies that the BPA, as the future central bank of Timor-Leste, is the agent responsible for the operational management of the Fund. The Ministry of Planning and Finance is responsible for setting the overall investment strategy for the Fund. The mandate given to the BPA is to manage the fund closely to the Merrill Lynch 0-5 years US Government Bond Index. The BPA has managed the portfolio close to the benchmark over the first eight quarters. The difference in return between the portfolio and the benchmark since the inception of the fund is negative 0.02 percent.

Highlights of the VIII Quarterly Report, which covers the period from 1 April to 30 June 2007, include: • An opening Balance was $1,217.98 million.

• The gross receipts during the quarter was $308.26 million which consist of taxpayer’s receipt of $93.570 million and the TSDA receipts of $214.70 million where of the cash outflows was USD 140.67 million consist of the transfer to the General State Budget of US$140.07 million and the Management fee of US$157 thousands. The net cash inflow was US$ 167.43 million.
• Absolute return number was 0.62% for the quarter, or $8.21 million
• A closing balance was $1,394.22 million.

The quarterly report, as well as the Petroleum Fund law and Management Agreement, is available from the Banking & Payment Authority’s website www.bancocentral.tl

Further information may be obtained from:
Maria Jose J. Sarmento, Acting Executive Director, Petroleum Fund Department, Banking & Payments Authority of Timor-Leste; Email: maria.sarmento@bancocentral.tl; Telp: + (670) 3313718 Fax: + (670) 3313716
Dili, 9 April (sic, actually August) 2007