PETROLEUM FUND OF
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 Finance, is
responsible for the overall management and investment strategy of the
The Petroleum Fund law gives the responsibility to the Central Bank to
undertake the operational management of the Fund under an agreement with the
Minister. A Management Agreement between the BPA (predecessor of Central
Bank of Timor-Leste) and the Ministry Finance was signed in 2005, amended in
June 2009 and its annex 1 subsequently amended in October 2010.
In executing its responsibility, the Central Bank of Timor-Leste
established the Petroleum Fund Management Department in August 2005. The
Department is headed by an Executive Director accountable to the Governor,
and comprises an Investment Division with responsibility for investment
management, and a Risk Management Division responsible for performance
measurement and to monitor and manage risks. Other divisions of the Central
Bank provide support for the Fund’s operations, including Accounting,
Settlements, Information Technology and Internal Audit.
The Central Bank commenced Petroleum Fund operations in September 2005
after an opening balance of $205 million was transferred by the Government.
The mandate given to the Central Bank in the Management Agreement includes a
requirement to passively manage the Fund close to a defined benchmark. Up to
June 2009, the whole Fund was managed internally by the Central Bank under a
In June 2009, the first diversification of the Fund took place by
appointing the Bank for International Settlements (BIS) as the Fund’s first
external manager managing 20% of the Fund. The BIS mandate is a global
portfolio invested in sovereign and supranational bonds in the currencies of
United States, United Kingdom, Australia, Japan and Euro.
A further diversification, into global equities, took place in October
2010 through the selection of Schroder Investment Management Limited as the
Funds’ first equity manager. This mandate is 4% of the Fund and is invested
in global stocks traded in the world’s largest 23 markets.
Details of the mandate and benchmark are in the Management Agreement and
the Quarterly Reports published in this website.
The Central Bank 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 Central Bank submits Quarterly Reports on the
performance of the Petroleum Fund to the Minister of Finance, with the
reports being published within 40 days of the end of each quarter. 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 Finance.
Enquires about the BCTL’s role in managing the Petroleum Fund should be
addressed to email@example.com firstname.lastname@example.org