The Portuguese began to trade with the island of Timor in the early 16th century and colonized it in mid-century. Skirmishing with the Dutch in the region eventually resulted in an 1859 treaty in which Portugal ceded the western portion of the island. Imperial Japan occupied Portuguese Timor from 1942 to 1945 but Portugal resumed colonial authority after the Japanese defeat in World War II. East Timor declared itself independent from Portugal on 28 November 1975 and was invaded and occupied by Indonesian forces nine days later. It was incorporated into Indonesia in July 1976 as the province of Timor Timur (East Timor). An unsuccessful campaign of pacification followed over the next two decades during which an estimated 100,000 to 250,000 people died. In an August 1999 UN-supervised popular referendum an overwhelming majority of the people of Timor-Leste voted for independence from Indonesia. However in the next three weeks anti-independence Timorese militias - organized and supported by the Indonesian military - commenced a large-scale scorched-earth campaign of retribution. The militias killed approximately 1400 Timorese and forced 300,000 people into western Timor as refugees. Most of the country's infrastructure including homes irrigation systems water supply systems and schools and nearly all of the country's electrical grid were destroyed. On 20 September 1999 Australian-led peacekeeping troops deployed to the country and brought the violence to an end. On 20 May 2002 Timor-Leste was internationally recognized as an independent state.
In 2006 internal tensions threatened the new nation's security when a military strike led to violence and a breakdown of law and order. At Dili's request an Australian-led International Stabilization Force (ISF) deployed to Timor-Leste and the UN Security Council established the UN Integrated Mission in Timor-Leste (UNMIT) which included an authorized police presence of over 1600 personnel. The ISF and UNMIT restored stability allowing for presidential and parliamentary elections in 2007 in a largely peaceful atmosphere. In February 2008 a rebel group staged an unsuccessful attack against the president and prime minister. The ringleader was killed in the attack and most of the rebels surrendered in April 2008. Since the attack the government has enjoyed one of its longest periods of post-independence stability including successful 2012 elections for both the parliament and president and a successful transition of power in February 2015. In late 2012 the UN Security Council ended its peacekeeping mission in Timor-Leste and both the ISF and UNMIT departed the country.

arable land: 10.1%
permanent crops: 4.9%
permanent pasture: 10.1%

urban: 95.2% of population
rural: 60.5% of population
total: 71.9% of population
urban: 4.8% of population
rural: 39.5% of population
total: 28.1% of population (2015 est.)

urban: 69% of population
rural: 26.8% of population
total: 40.6% of population
urban: 31% of population
rural: 73.2% of population
total: 59.4% of population (2015 est.)

Democratic Party or PD [Fernando 'Lasama' de ARAUJO]
Frenti-Mudanca [Jose Luis GUTERRES]
National Congress for Timorese Reconstruction or CNRT [Kay Rala Xanana GUSMAO]
Revolutionary Front of Independent Timor-Leste or FRETILIN [Mari ALKATIRI]
(only parties in Parliament are listed)

Since gaining independence in 1999 Timor-Leste has faced great challenges in rebuilding its infrastructure strengthening the civil administration and generating jobs for young people entering the work force. The development of offshore oil and gas resources has greatly supplemented government revenues. This technology-intensive industry however has done little to create jobs in part because there are no production facilities in Timor-Leste. Gas is currently piped to Australia for processing but Timor-Leste has expressed interest in developing a domestic processing capacity.
In June 2005 the National Parliament unanimously approved the creation of the Timor-Leste Petroleum Fund to serve as a repository for all petroleum revenues and to preserve the value of Timor-Leste's petroleum wealth for future generations. The Fund held assets of $16.5 billion as of December 2014. Oil accounts for 90% of government revenues and the drop in the price of oil in 2014 has led to concerns about the long-term sustainability of government spending. The Ministry of Finance maintains that the Petroleum Fund is sufficient to sustain government operations for the foreseeable future.
Annual government budget expenditures increased markedly between 2009 and 2012 but dropped significantly in 2013-15. Historically the government failed to spend as much as its budget allowed. The government has focused significant resources on basic infrastructure including electricity and roads. Limited experience in procurement and infrastructure building has hampered these projects. The underlying economic policy challenge the country faces remains how best to use oil-and-gas wealth to lift the non-oil economy onto a higher growth path and to reduce poverty.

$6.57 billion (2015 est.)
$6.302 billion (2014 est.)
$5.974 billion (2013 est.)

4.3% (2015 est.)
5.5% (2014 est.)
2.8% (2013 est.)

$5,600 (2015 est.)
$5,500 (2014 est.)
$5,300 (2013 est.)

11% (2013 est.)
18.4% (2010 est.)

31.9 (2007 est.)
38 (2002 est.)

0.6% (2015 est.)
0.4% (2014 est.)

13.5% (31 December 2015 est.)
12.87% (31 December 2014 est.)

$397.7 million (31 December 2015 est.)
$342.9 million (31 December 2014 est.)

$677.8 million (31 December 2015 est.)
$599.8 million (31 December 2014 est.)

$-127 million (31 December 2015 est.)
$-15 million (31 December 2014 est.)

$431 million (2015 est.)
$1.096 billion (2014 est.)

$18 million (2015 est.)
$15.5 million (2014 est.)

$647.7 million (2015 est.)
$764.2 million (2014 est.)

$311.5 million (31 December 2014 est.)
$687 million (31 December 2013 est.)

1.5% of GDP (2014)
1.8% of GDP (2013)
2.92% of GDP (2012)
2.6% of GDP (2011)
2.92% of GDP (2010)