The Petroleum Fund of Timor-Leste was formed by the enactment of the Petroleum Fund Law Number 9/2005 promulgated in August 2005. The intention of the law is that the Petroleum Fund shall contribute to the wise management of the petroleum resources for the benefit of both current and future generations. The Petroleum Fund is a tool that contributes to sound fiscal policy, where appropriate consideration and weight is given to the long-term interests of Timor-Leste’s citizens. The Petroleum Fund is to be coherently integrated into the State Budget and shall give a good representation of the development of public finances The Petroleum Fund is required to be prudently managed and operate in an open and transparent fashion, within its constitutional and legal framework.

The Government of Timor-Leste, represented by the Minister of Planning and Finance, is responsible for the overall management and investment strategy of the Petroleum Fund.

Article 11.3 of the Petroleum Fund law gives the responsibility to the Banking and Payments Authority (BPA) to undertake the operational management of the Fund under an agreement with the Minister.  A Management Agreement between the BPA and the Ministry of Planning and Finance was signed in 2005.

To execute its responsibility, the BPA established the Petroleum Fund Management Department in August 2005. The Department is headed by an Executive Director accountable to the General Manager, and comprises an Investment Division with responsibility for investment management, and a Risk Management Division responsible for performance measurement and to monitor and manage risk.  Other divisions of the BPA provide support for the Fund’s operations, including Accounting, Settlements, Information Technology and Internal Audit.

The BPA commenced Petroleum Fund operations in September 2005 after an opening balance of $205 million was transferred by the Government. The mandate given to the BPA in the Management Agreement includes a requirement to passively manage the Fund close to a defined benchmark.

Details of the mandate and benchmark are in the Management Agreement and the Quarterly Reports.  The portfolio is managed 100% internally within the BPA.

The BPA also provides the secretariat for the Investment Advisory Board, which is established in the Petroleum Fund law to provide the Minister with advice on the Fund’s investment strategy.

To ensure transparency, the BPA submits Quarterly Reports on the performance of the Petroleum Fund to the Minister of Planning and Finance, with the reports being published within 40 days of the end of each quarter.  Previous reports are available on this web site.  The Petroleum Fund’s Annual Report, which contains a more complete description of the Fund’s activities and its audited financial statements, is published by the Ministry of Planning and Finance. 

Enquires about the BPA’s role in managing the Petroleum Fund should be addressed to info@bancocentral.tl info@bancocentral.tl