Boletim Económico
Boletim Económico
A publication of the Banking and Payments Authority of Timor-Leste
October, 2003
Special issue
Timor-Leste’s First Circulating Coins
In this edition
Working closely with the Government
The Regulation clearly states that the
Timor-Leste’s firsr
of the Democratic Republic of Timor-
BPA is empowered to issue coins, to be
circulating coins 1
Leste, the BPA-Banking and Payments
known as “centavos”, which will have
An example: the
Authority (ABP-Autoridade Bancária e
parity with US cents. The Regulation
50 centavos coin 2
de Pagamentos) has decided to issue
also permits both kinds of coins –
The new coins: a short
coins for Timor-Leste.
Timorese “centavos” and American
history and main
“cents” – to circulate side by side.
characteristics 3
This decision, which will not change
Why Timor-Leste will
the policy of using the United States dol-
Therefore, people should be indiffer-
not issue (now...)
lar as Timor-Leste’s official currency –
ent as to whether they are carrying one
a national currency 4
in particular US bank notes – is based
form of coin or the other, and the BPA
on a number of reasons, including con-
guarantees the replacement of any
venience, ease of use, having the values
amount of American “cents” with an
Points to
clearly expressed in numbers, having
equal amount of Timorese “centavos”,
an alternative to the rapidly deteriorat-
and vice versa. In this manner, holders
note...
ing US$1 bills, affirming the sovereignty
of Timorese “centavos” can be assured
of Timor-Leste as the world’s newest
of their value.
? The first circulating
and youngest country, and finally, the
coins for use in Timor-
possibility of the state obtaining a small
A public campaign to inform people
Leste, the centavos,
will be issued in No-
financial benefit.
about the new coins starts in October
and will last about one month.
vember 2003.
The authority to issue coins already
? The coins will be issued exists in UNTAET Regulation 2001/30
The coins that will be put into circula-
at par (1:1) with Ameri-
which established the Banking and Pay-
tion next November/2003 are pictured
can cents.
ments Authority.
below.
? To issue a national
currency, i.e. bank-
notes, just now would
Common face (different denominations)
1 centavo = 1 cent
5 centavos = 5 cents
be wrong, because
this would imply that
Timor-Leste has tech-
nical and financial
conditions in place
that do not exist at
present.
? The process of deter-
mining the characteris-
tics of the coins
(denominations, de-
signs, metals, etc) took
nearly a year, and is an
example of the close
cooperation between
10 centavos = 10 cents
25 centavos = 25 cents
50 centavos
Government and the
ABP/BPA.
? Although people can
continue to use both
the American cents
and the Timorese cen-
tavos, the ABP/BPA
will organize a cam-
paign to promote the
use of the national
coins in place of the
American coins.
One example: the new 50 centavos coin
Pg. 2
Boletim Económico
Timor Leste’s new coins
A short history and the main features
The first reference to Timorese national coins dates from the Melbourne Conference in 1998, promoted by CNRT, held late in
the period of Timor-Leste’s struggle for liberation. At that time, the thinking was that Timor-Leste would issue its own national cur-
rency, and not just the coins that are being issued now. On the last page of this Bulletin are a number of reasons why it is not fea-
sible for Timor-Leste to issue its own currency at the present time.
The authority to issue coins is established by law in UNTAET Regulation 2001/30 on the Banking and Payments Authority of
Timor-Leste. Article 6(a) states that the BPA is authorized to “issue coins, called centavos, that will have legal tender status in
addition to the United States dollar.” Section 50.2(a) states that the BPA “shall exchange centavos coins for United States dollars,
and United States dollars for centavos coins, at the rate of one hundred centavos for one United States dollar,” that is, there is
parity between one centavo and one United States cent.
As a consequence of these provisions in the BPA Regulation, and taking into account a number of other reasons noted on the
first page of this Bulletin, the Government of the Democratic Republic of Timor-Leste and the BPA has decided to issue coins,
with the task being put in the hands of the BPA.
After a process of consultation with several international mints, and naturally with the Government of Timor-Leste – which in-
volved the President of the Republic in choosing the designs that would be used – it was decided to award the minting contract to
the Imprensa Nacional-Casa da Moeda, the Portuguese mint, because the company offered the most acceptable price and the
most preferred designs for the coins. The Portuguese mint also, according to the terms of the contract signed in Lisbon on 20
May 2003, has the exclusive right to market the numismatic versions of the coins outside Timor-Leste. This marketing agreement
enabled the minting cost to the BPA to be greatly reduced, while also affording the opportunity for the coins to enhance Timor-
Leste’s image worldwide.
A total of 16 million coins have been minted and will be put into circulation in November, with values of 1, 5, 10, 25 and 50 cen-
tavos. The reproductions alongside represent the coins at their actual sizes.
The coins have a common face that includes – apart from their value in easily-read numerals – a kaibuk, and, around the bor-
der, a design inspired by traditional tais patterns representing crocodiles.
The 1 centavo coin (in a silver colour being made of nickel coated steel with a diameter of 17mm, a thickness of 2.15mm, and
weighing 3.1 grams) portrays a Nautilus (Nautilus Pompilius) a cephalopod with an external shell that
lives up to 600m below the surface. Its use on the coin draws attention to the need to preserve our
country’s maritime resources, one of its main sources of wealth. The American cent is about 19mm,
slightly larger than the Timorese one centavo.
The 5 centavos coin (in a silver colour being made of nickel coated steel with a diameter of
18.75mm, a thickness of 2.15mm, and weighing 4.1 grams) features rice (oryza sariva). The design
intends to draw attention to the need to provide food for all Timorese, especially the poor, who form
a significant part of the population. The American 5 cent coin (nickel) measures about 21.2mm, and
is larger than the corresponding Timorese coin.
The 10 centavos coin (in a silver colour being made of nickel coated steel with a diameter of
20.75mm, a thickness of 2.15mm, and weighing 5.2 grams) portrays a Timorese rooster, frequently
seen in one of the most typical sports in Timor-Leste, cockfighting. It was chosen as a homage
to Timorese culture, but also to recognise the determination of the Timorese people during the
struggle for independence. It also appears on the flag of the Timor-Leste Defence Force (FDTL)
and its inclusion on the coin is a homage to those who fought for our country’s freedom. The
coin is larger than the corresponding US coin, the 10 cent (dime), by a little more than 3mm.
The 25 centavos coin (in a gold colour being made of nickel-brass alloy with a diameter of
21.25mm, a thickness of 2.3mm, and weighing 5.85 grams) portrays a beiro, a boat used for tra-
ditional fishing. Its use draws attention to the need to use marine resources economically, but
in a way that will preserve them for future generations. At the same time it draws attention to
the need of the people to increase the diversity of their diet to improve their health. The Ameri-
can 25 cents (quarter) is slightly larger than the 25 centavos coin.
Finally, the 50 centavos (in a gold colour being made of nickel-brass alloy with a diameter of
25mm, a thickness of 1.9mm, and weighing 6.5 grams) illustrated on the previous page por-
trays our country’s main source of agricultural wealth, coffee (coffea arabica). Coffee was cho-
sen for this coin to emphasise the wealth that comes from exports of this product, both for the
country and the coffee-growers. Equally, it is a homage to the 75% of Timorese people who live in rural areas and who principally
depend on agriculture for their livelihood. It is approximately the same size as an American quarter, and it is hoped that its intro-
duction will partially replace the large number of one-dollar notes in circulation. Not having been designed for tropical climates,
the American $1 notes have been suffering rapid deterioration due to high usage in the economy. As a reminder, this is a new
coin that does not have an equivalent American counterpart.
Special issue
Pg. 3
Why Timor-Leste will not issue a National Currency
(at least for the present… )
Whether or not you agree with the choice of the
than real – at least in the short-medium term – one thing
American dollar as our national currency – there were
would be inevitable: devaluation would translate into a
suggestions at the outset of a Timorese national
long period of significant price increases for imported
currency linked to the Australian dollar (AUD) or the
goods that, besides being inflationary in itself, would
Indonesian Rupiah (IDR), or even to a “basket” of 4 or
sooner or later transmit into the economy. This
5 different currencies – it does not seem advisable to
transmission of the effects of inflation would result in rises
consider the possibility of Timor-Leste issuing its own
in internal production costs (energy, equipment, other
currency at this time.
inputs) that would combine with the “inflation effect” from
producers and traders. Similar to the effects of tax
The main problem is that if it did so, Timor-Leste
increases, they would increase their prices beyond the
would have to choose an exchange rate and an
point of the increases in production costs.
exchange rate regime for its currency — – and have,
inter alia, enough reserves to manage them.
On the other hand, maintaining its own currency
obliges a country to maintain a relatively balanced
We can initially exclude the possibility of a floating
situation in its external accounts. Timor-Leste, at this
exchange rate because given Timor-Leste’s present
stage in its development, is experiencing enormous
economic circumstances, it would most likely be that its
commercial deficits, and would not have the financial
currency would soon collapse into the realm of
resources to ensure the strength of its currency, which
numismatic curiosities. The problem then is in defining
would be subjected to strong
how rigid the exchange rate would be,
downwards pressures and a series of
and to which currencies the strongest
devaluations.
links would be made.
It seems likely that only in 5 or 6
Some people consider that by
years, after the inflow of the Timor Sea
issuing a currency there is an
revenues enables a sufficient level of
opportunity to devalue it, so that unlike
reserves to be acquired to support the
the present 1:1 link to the US dollar, 1
exchange rate policy, and when the
US dollar could be made equivalent to
national economy is much less
2 “osan” and the national currency
depended on external aid by being self-
would have a rate of about 2:1, or
sustainable through the development of
close to the Australian dollar.
its resources, only then will the
Alternatively, rates of 1:5 or 1:10 could
conditions be in place for starting to
be chosen. According to the defenders
contemplate the possibility of issuing
of this proposal, this is necessary to
our own currency, i.e. both notes and
make the Timorese economy more
coins of Timor-Leste.
competitive in comparison with our ASEAN neighbours,
achieved through “artificially reducing” salaries in
That decision would have to be considered seriously
Timor-Leste, thereby attracting foreign investment that
from a technical viewpoint, for it rests on a number of
would generate growth in employment and exports.
important factors, and therefore would need to be studied
very carefully. For example, the level of strictness in
In fact salary costs are not the main determinant in
managing the exchange rate – and to what currencies the
investment decisions, but rather such decisions are
rate would be pegged, and how strongly – would have
influenced by a range of other structural factors.
impacts on the money supply, and determine the tools of
Examples? A legal framework with well-defined rules,
monetary policy.
an effective and efficient judicial system (including
access to the courts, and their means of operation) that
In this context, there is a rule to follow: given the high
assists in the resolution of conflicting interests, a well-
degree of sensitivity on economic agents of the currency
founded infrastructure (transportation, communications,
and its management, silence is the golden rule…
etc), a workforce that is well trained and willing to work,
Therefore it seems advisable that from now on
and a market environment.
everyone should keep silent on this subject. We shall
But if gains in production (and productivity) resulting
lead by example. Follow us.
from such a devaluation turned out to be more illusory
This publication was prepared by the Economic and Statistics Division of the Banking and Payments Authority of Timor-Leste
Avª Bispo Medeiros POBox 59 Dili Timor-Leste Tel: ++.670. 331 37 18 Fax: [… ] 331 37 16
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