Dili

Dili demonstrates how petroleum wealth can create capital city hypertrophy while accelerating national fiscal crisis. This capital concentrates government functions, foreign investment, and urban migration while rural Timor-Leste remains agricultural and impoverished. Development focused too heavily on Dili, neglecting rural areas and contributing to soaring unemployment, driving rural residents to seek jobs in the capital even as formal employment opportunities remain scarce.

The 2025 economic situation reveals existential challenges. Timor-Leste's Petroleum Fund, established in 2005 and valued at $18.27 billion in December 2024, faces unsustainable withdrawals. The government's $2.6 billion 2025 budget exceeds double the sustainable withdrawal level, accelerating the rush toward a fiscal cliff that could deplete the fund by the late 2030s. Oil and gas production from existing fields has dwindled, with economic salvation pinned on the Greater Sunrise gas field, estimated to hold $33 billion in resources but stalled over disputes between the government's insistence on onshore processing and operator Woodside Petroleum's preference for Australian processing.

ASEAN membership in October 2025 marked a 13-year diplomatic achievement, and WTO accession in February 2024 opened trade opportunities. ADB projects 3.8% economic growth for 2025, but the fiscal deficit is projected at 57% of GDP. Dili embodies the resource curse paradox: the capital city of a petroleum-rich nation faces the prospect of import disruption and public service collapse within 15 years unless diversification succeeds or Greater Sunrise development begins. The city's fortunes depend entirely on political decisions about managing finite petroleum wealth.