[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111819-en":3,"doc-seo-111819-105":29,"detail-sidebar-cat-0-en-105":91},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},111819,1374391974468,"Eden","https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0",8,"Research & Report","Democratic Republic of Timor-Leste - Joint Bank-Fund Debt Sustainability Analysis - Risk Assessment Summary","The Democratic Republic of Timor-Leste faces a moderate risk of overall and external debt distress under the 2024 baseline, with judgment applied because the Petroleum sovereign wealth fund provides meaningful mitigation over the next decade. Although the present value of the debt service-to-exports ratio is projected to breach indicative thresholds in the medium term, long-term risks remain broadly similar while debt carrying capacity is upgraded. Under the baseline, Petroleum Fund assets could be fully depleted by 2038, requiring fiscal consolidation and structural reforms to sustain both fiscal and debt sustainability. ","Public Disc losure Authorized  \nPub lic Disc losure Authorized  \nApproved by:  \nManuela Francisco and Lalita Moorty (IDA) , and Nada Choueiri and Stefania Fabrizio (IMF)  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF)  \n\n| DEMOCRATIC REPUBLIC OF TIMOR-LESTE:\u003Cbr>JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | Moderate |\n| Overall risk of debt distress | Moderate |\n| Granularity in the risk rating | Limited space to absorb shocks |\n| Application of judgment | Yes. Petroleum sovereign wealth fund is a strong mitigating factor for the country’s debt sustainability in the next 10 years. |\n\nTimor-Leste remains at moderate risk of overall and external debt distress, with application of judgement, unchanged from the 2024 Article IV debt sustainability analysis. The present value of the debt service-to-exports ratio under the baseline is projected to breach the indicative threshold in the medium term, triggering a mechanical rating of high risk of overall and external debt distress. In the medium term, however, the Petroleum Fund (PF) remains large relative to projected debt levels and debt service requirements, and its assets are liquid and accessible, thus acting as a mitigating factor, prompting the use of judgement to upgrade the risk assessment. Long-term risks to debt sustainability remain broadly the same as in the 2024 Article IV debt sustainability analysis—while the deficits are larger over the projection horizon, debt carrying capacity has been upgraded. Staff projects that the PF, which is the main source of funding of fiscal deficits, would be fully depleted in 2038 under the baseline scenario, triggering a breach of all debt indicators towards the end of the twenty-year projection horizon. However, there is time to adopt necessary policy adjustments—staff’s reform scenario illustrates how fiscal consolidation and structural reforms can ensure both fiscal and debt sustainability in the long term.  \n1. The coverage of public sector debt used in this report is public and publicly guaranteed debt. Timor-Leste’s public and publicly guaranteed external debt is owed entirely by the central government. The public sector only borrows externally, given a lack of domestic financing sources. 1 While guarantees by the state to state-owned enterprises are included in the coverage , there are currently no guarantees granted. The debt coverage does not include debt issued by the Social Security Fund , state and local government, extra budgetary funds, the central bank, and SOEs , all of which are thought to be zero due to legal restrictions on borrowing by these entities.2 The data coverage is broadly comprehensive for Timor-Leste, given the dominant role of the central government in incurring debt obligations.  \n2. The contingent liability stress test reflects risks not captured in the baseline (Text Table 1) .  \nTo assess potential residual risks from unreported SOE liabilities or arrears, the default shock to SOE’s debt (2 percent of GDP) and explicit contingent liabilities related to judicial litigations (0 .5 percent of GDP, as reported in the 2025 Budget) are used.3 Contingent liabilities from public private partnerships are negligible. Public transfers to SOEs have risen sharply, increasing the fiscal deficit, with many SOEs generating persistent operating losses (World Bank 2025) . As part of the World Bank’s Sustainable Development Finance Policy, the government made progress toward greater fiscal transparency and risk management by publishing standardized financial statements for all major SOEs in the 2025 Budget and introducing a strengthened fiscal risk statement (highlighting macroeconomic vulnerabilities, and other contingent liabilities) . Additionally, the government in FY25 committed to refrain from contracting nonconcessional external debt.  \n| 1 | The country's coverage of public debt The central gove","cbCaibzbLDg1fZHb","https://ap.wps.com/l/cbCaibzbLDg1fZHb","pdf",899230,1,25,"English","en",105,"# Risk of debt distress\n## Application of judgment and Petroleum Fund mitigation\n# Baseline breach and rating implications\n## Medium-term threshold breach and mechanical high-risk rating\n# Coverage of public sector debt\n## Public and publicly guaranteed external debt\n# Contingent liability stress test\n## SOE liabilities, arrears, and judicial litigation risks\n# Fiscal and long-term reform scenario","[{\"question\":\"Why is judgment applied to Timor-Leste’s debt sustainability assessment?\",\"answer\":\"Judgment is applied because the Petroleum sovereign wealth fund is a strong mitigating factor for debt sustainability over the next 10 years, helping upgrade the risk assessment despite medium-term threshold pressures.\"},{\"question\":\"What triggers the projected higher risk rating in the medium term?\",\"answer\":\"The present value of the debt service-to-exports ratio is projected to breach the indicative threshold in the medium term, triggering a mechanical high-risk rating for overall and external debt distress.\"},{\"question\":\"What happens to the Petroleum Fund under the baseline scenario?\",\"answer\":\"Staff projections indicate the Petroleum Fund would be fully depleted in 2038 under the baseline scenario, leading to breaches across debt indicators toward the end of the 20-year projection horizon.\"}]",1784491850,63,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":86,"head_meta":88,"extra_data":90,"updated_unix":27},"democratic-republic-of-timor-leste-joint-bank-fund-debt-sustainability-analysis-risk-assessment-summary","",{"@graph":35,"@context":85},[36,53,68],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/democratic-republic-of-timor-leste-joint-bank-fund-debt-sustainability-analysis-risk-assessment-summary/111819/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":62,"encodingFormat":60,"isAccessibleForFree":63,"interactionStatistic":64},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-20","2026-07-19",true,{"@type":65,"interactionType":66,"userInteractionCount":20},"InteractionCounter",{"@type":67},"ViewAction",{"@type":69,"mainEntity":70},"FAQPage",[71,77,81],{"name":72,"@type":73,"acceptedAnswer":74},"Why is judgment applied to Timor-Leste’s debt sustainability assessment?","Question",{"text":75,"@type":76},"Judgment is applied because the Petroleum sovereign wealth fund is a strong mitigating factor for debt sustainability over the next 10 years, helping upgrade the risk assessment despite medium-term threshold pressures.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"What triggers the projected higher risk rating in the medium term?",{"text":80,"@type":76},"The present value of the debt service-to-exports ratio is projected to breach the indicative threshold in the medium term, triggering a mechanical high-risk rating for overall and external debt distress.",{"name":82,"@type":73,"acceptedAnswer":83},"What happens to the Petroleum Fund under the baseline scenario?",{"text":84,"@type":76},"Staff projections indicate the Petroleum Fund would be fully depleted in 2038 under the baseline scenario, leading to breaches across debt indicators toward the end of the 20-year projection horizon.","https://schema.org",{"og:url":51,"og:type":87,"og:title":13,"og:site_name":58,"og:description":14},"article",{"robots":89,"canonical":51},"index,follow",{"doc_id":7,"site_id":24},{"code":4,"msg":5,"data":92},[93,97,101,105,110,115,120,123,128,131,135],{"id":20,"doc_module":4,"doc_module_name":45,"category_name":94,"show_sort_weight":95,"slug":96},"Story & Novel",90,"story-novel",{"id":46,"doc_module":4,"doc_module_name":45,"category_name":98,"show_sort_weight":99,"slug":100},"Literature",80,"literature",{"id":52,"doc_module":4,"doc_module_name":45,"category_name":102,"show_sort_weight":103,"slug":104},"Exam",70,"exam",{"id":106,"doc_module":4,"doc_module_name":45,"category_name":107,"show_sort_weight":108,"slug":109},5,"Comic",60,"comic",{"id":111,"doc_module":4,"doc_module_name":45,"category_name":112,"show_sort_weight":113,"slug":114},6,"Technology",50,"technology",{"id":116,"doc_module":4,"doc_module_name":45,"category_name":117,"show_sort_weight":118,"slug":119},7,"Healthcare",40,"healthcare",{"id":11,"doc_module":4,"doc_module_name":45,"category_name":12,"show_sort_weight":121,"slug":122},30,"research-report",{"id":124,"doc_module":4,"doc_module_name":45,"category_name":125,"show_sort_weight":126,"slug":127},9,"Religion & Spirituality",20,"religion-spirituality",{"id":126,"doc_module":4,"doc_module_name":45,"category_name":129,"show_sort_weight":126,"slug":130},"World Cup","world-cup",{"id":132,"doc_module":4,"doc_module_name":45,"category_name":133,"show_sort_weight":132,"slug":134},10,"Lifestyle","lifestyle",{"id":136,"doc_module":4,"doc_module_name":45,"category_name":137,"show_sort_weight":106,"slug":138},19,"General","general"]