United Nations – Oil-rich East Timor can maintain double-digit economic growth in 2009 because falling prices for commodities should reduce spending on imports, East Timor's president told the UN Security Council Thursday.
"Our economy is doing very well with more than 10 percent real growth at the end of 2008. With a 2009 budget of $680 million and $200 million in donor programs, I believe we will be able to maintain two-digit growth in spite of the international financial crisis," said President Jose Ramos-Horta, a Nobel Peace Prize winner.
East Timor's dependence on imported goods, from basic foods to cement and steel, meant it suffered greatly from the 2007-2008 food crisis when prices soared globally. "While our petroleum revenues will be significantly reduced, so will our import bill as commodity prices fall," Ramos-Horta said.
Amid the global financial crisis, economic growth in the developed world is contracting and dragging down growth in emerging markets, which were largely unscathed until six months ago.
East Timor is rich in oil resources, but it is just starting to develop them. The country has an average income of just 50 US cents a day. Over 40 percent of its population of roughly 1 million is unemployed.
Ramos-Horta said spending from the country's petroleum savings fund, worth more than $4 billion, will allow the government to invest in strategic sectors of the economy and "fuel economic growth and relative wealth."
The price for a barrel of crude oil surged to a record high above $147 in July 2008, but the global economic downturn has since pulled it below $40.
The fledgling nation, which was invaded by its neighbor Indonesia in 1975, has experienced uprisings and unrest since gaining full independence in 2002 after a period of UN administration.
Ramos-Horta was shot and wounded in February 2008, the same day Prime Minister Xanana Gusmao was attacked. Since then the security situation has "strikingly improved," the Brussels-based International Crisis Group said Feb. 9.
That contrasted with news reports in late December 2008 in the Australian media that said East Timor was on the brink of collapse, citing a leaked UN peacekeeping briefing.