section_path: Economy
section_name: Economy
paragraph_text: Economy
  
  The economy of Timor-Leste is a market economy, although it is dependent upon the export of a few commodities and has a large public sector. Internally, market operations are limited by widespread poverty.: 20 The country uses the United States dollar, producing its own coins to facilitate smaller transactions. The economy is generally open to foreign investment, although a prohibition on foreigners owning land means many require a local partner in the country.: 20 Competition is limited by the small size of the economy, rather than any government barriers. There are far more imports than exports,: 21 and prices for goods are often higher than in nearby countries.: 27 Inflation is strongly affected by government spending.: 257 Growth has been slow, averaging just 2.5% per year from 2011 to 2021.: 24
  
  Most of the country is very poor, with just more than 40% living under the national poverty line. This poverty is especially prevalent in rural areas, where many are subsistence farmers or fishermen. Even in urban areas, the majority are poor. Overall, women are poorer than men, often being employed in lower-paying careers.: 18 Malnutrition is common, with over half of children showing stunted growth.: 255 While 91% of married working age (15–49) men were employed as of 2016, only 43% of married working age women were. There are small disparities in favour of men in terms of home and land ownership and owning a bank account.: 14 The eastern three municipalities, which contain around a quarter of the population, has less poverty than the western areas, which contain 50% of the population.: 214
  
  Sixty-six per cent of families are in part supported by subsistence activities; however, the country as a whole does not produce enough food to be self-sustaining, and thus relies on imports.: 16 Agricultural work carries the implication of poverty, and the sector receives little investment from the government.: 260 Ninety-four per cent of domestic fish catch comes from the ocean, especially coastal fisheries.: 17 Those in the capital of Dili are on average better off, although they remain poor by international standards.: 257 The small size of the private sector means the government is often the customer of public businesses. A quarter of the national population works in the informal economy, with the official public and private sectors employing 9% each.: 18 Of those of working age, around 23% are in the formal sector, 21% are students, and 27% are subsistence farmers and fishers.: 21 The economy is mostly cash-based, with little commercial credit available from banks.: 11–12 Remittances from overseas workers add up to around $100 million annually.: 257
  
  This poverty belies significant wealth in terms of natural resources, which at the time of independence had per capita value equivalent to the wealth of an upper-middle income country. Over half of this was in oil, and over a quarter natural gas. The Timor-Leste Petroleum Fund was established in 2005 to turn these non-renewable resources into a more sustainable form of wealth.: 4–6 From 2005 to 2021, $23 billion earned from oil sales has entered the fund. $8 billion has been generated from investments, while $12 billion has been spent.: 30 A decrease in oil and gas reserves led to decreasing HDI beginning in 2010.: 18–19 Eighty per cent of government spending comes from this fund, which as of 2021 had $19 billion, 10 times greater than the size of the national budget. As oil income has decreased, the fund is at risk of being exhausted. Withdrawals have exceeded sustainable levels almost every year since 2009.: 23 Resources within the Bayu-Undan field are expected to soon run out, while extracting those within the so far undeveloped Greater Sunrise field has proven technically and politically challenging. Remaining potential reserves are also losing value as oil and gas become less favoured sources of energy.: 264–272
  
  The country's economy is dependent on government spending and, to a lesser extent, assistance from foreign donors. Government spending decreased beginning in 2012, which had knock-on effects in the private sector over the following years. The government and its state-owned oil company often invest in large private projects. Decreasing government spending was matched with a decrease in GDP growth.: 18 After the petroleum fund, the second largest source of government income is taxes. Tax revenue is less than 8% of GDP, lower than many other countries in the region and with similarly sized economies. Other government income comes from 23 "autonomous agencies", which include port authorities, infrastructure companies, and the National University of Timor-Leste.: 13, 28–309 Overall, government spending remains among the highest in the world,: 12 although investment into education, health, and water infrastructure is negligible.: 260
  
  Private sector development has lagged due to human capital shortages, infrastructure weakness, an incomplete legal system, and an inefficient regulatory environment. Property rights remain ill-defined, with conflicting titles from Portuguese and Indonesian rule, as well as needing to accommodate traditional customary rights.: 23 As of 2010, 87.7% of urban (321,043 people) and 18.9% of rural (821,459 people) households have electricity, for an overall average of 38.2%. The private sector shrank between 2014 and 2018, despite a growing working age population. Agriculture and manufacturing are less productive per capita than at independence.: 255–256 Non-oil economic sectors have failed to develop, and growth in construction and administration is dependent on oil revenue.: 256 The dependence on oil shows some aspects of a resource curse. Coffee made up 90% of all non-fossil fuel exports from 2013 to 2019, with all such exports totalling to around US$20 million annually.: 257 In 2017, the country was visited by 75,000 tourists.