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International Monetary Fund. Asia and Pacific Dept

from the PF to the budget, the PF’s targeted asset allocation reflects a preference for highly liquid assets (see figure). Currently, the targeted asset allocation is 60 percent in Treasury Bonds of developed countries and 40 percent in developed market equities. 3 Since its inception, the average return on PF assets has been around 4.4 percent (as of end-2017). 4 Accessibility . The PF constitutes the main financing source for the budget. The amount is guided by the Estimated Sustainable Income (ESI), which is set at 3 percent of total Petroleum Wealth 5

International Monetary Fund

’s investment is to generate a margin of 90 basis points above the six-month SDR rate, over a long-term investment horizon of at least 10 years. Target Asset Allocation and Eligible Investments 14. The Investment Assets of the PRG Trust shall be invested according to the following allocation targets as a percent of the Investment Assets of the PRG Trust: (a) 45 percent in liquidity and short duration fixed-income components, with the specific allocation between these two components to be established by the Managing Director, (b) 30 percent in a component of corporate

International Monetary Fund
On March 22, 2017, the Executive Board adopted the Guidelines for Investing PRG, PRG-HIPC, and CCR Trust Assets (the “Guidelines”) to establish the investment objectives and policies to guide the investment of assets of the PRG, PRG-HIPC, and CCR Trusts (the“Trusts”) which are available for investment under the Trusts’ instruments. These Guidelines are included in this document.
International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation highlights that Timor-Leste remains a fragile post-conflict nation with weak human and institutional capacity and large infrastructure gaps. The main challenge facing Timor-Leste is to effectively manage its petroleum wealth to reduce public-sector dependence, diversify the non-oil economy, generate jobs for a young and rapidly-growing population, and raise living standards. Political uncertainty constrained public spending in 2017–18, resulting in a sharp contraction of non-oil GDP in 2017 and flat growth in 2018. The report discusses that risks to the outlook are closely tied to the success of fiscal and structural reforms to maintain macroeconomic stability, ensure long-run fiscal sustainability, and facilitate economic diversification. The consultation recommends that a fiscal strategy should be pursued to improve expenditure control and efficiency, mobilize domestic revenue, and commit to protecting the wealth of the Petroleum Fund. Ongoing efforts to strengthen public financial management and promote good governance are crucial to ensure public investment efficiency and enhance the quality of public services.
International Monetary Fund. Secretary's Department

fluctuate because of changes in market price. The investment objectives and strategies of the Trusts, including asset allocation and risk tolerance (see Note 5), expose the Trusts’ investments to market risk. These risks include interest rate risk, exchange rate risk, and other price risks. PRG Trust investments The market risks on the PRG Trust investment portfolio are mitigated by: (i) ensuring diversification at the portfolio level through a target asset allocation and within asset class components through concentration and exposure limits; (ii) setting

International Monetary Fund. Monetary and Capital Markets Department

focus, from outperforming a benchmark to minimizing asset and liability mismatches, has prompted the development of new primarily liability-driven investment products by banks and investment providers. Using corporate and government bonds (including index-bonds), and futures and swaps (including inflation swaps), pension funds and life insurers seek to match their projected liabilities. The real novelty lies in the use of lower costs and flexible suites of funds through which the targeted asset allocation is achieved. 30 More broadly, the fund structure allows the