Overview

Over the past decade, Timor-Leste has created the conditions for successful development. It has credibly emerged from a crisis of internal violence and political instability in 2006-2007 and increased tangible services for the population, creating hard-won political stability, absence of conflict and a new confidence in the state. Largely peaceful democratic elections for the presidency and the parliament since 2012 reflect these achievements.

After 14 years of independence, Timor-Leste has achieved tremendous progress – drawing down money from the Petroleum Fund and channeling it through the budget to meet pressing needs. The effectiveness of this process is evident in the near-halving of infant and child mortality rates; significant gains in health and education; economic growth to rival regional neighbors; increasing citizen participation, and; the gradual strengthening of state institutions.

Ensuring Timor-Leste’s young people are educated, healthy, and productively employed are arguably the biggest development challenges facing Timor-Leste over the next decade. With 60% of the population under 25 years of age, Timor-Leste is one of the youngest countries in the world. Benefitting from high global oil prices, the country achieved lower middle-income status in 2011, but poverty remains high, particularly in rural areas, where the majority of the population lives.

To create job opportunities for youth, sustain inclusive growth, and prepare for a future of potentially declining natural resource returns, Timor-Leste needs to diversify its economy and sources of revenue, elevate the quality of health and education services, and equip the population with viable skills. These efforts must be underpinned by capable institutions with a strong and consistent focus on quality of spending and policies that nurture private investment.

The World Development Report 2011 found that on average, post-conflict countries take between 15 and 30 years – a full generation – to transition out of fragility and to build resilience. It is against this backdrop that Timor-Leste’s social and economic development can be seen as remarkable.

The government’s Strategic Development Plan for 2011 – 2030 offers a vision, targets and indicators for the next two decades. It is built around four pillars:

i.        Social capital: health, education and social protection;

ii.       Infrastructure: transport, telecommunication, power, and water supply and sanitation;

iii.       Economic foundations: targeting three sectors for development – agriculture, tourism and petrochemicals – to bring about growth, jobs, and new sources of public revenues beyond oil; and

iv.        Institutional framework: focusing on macroeconomic management and improving the capacity and effectiveness of government institutions.

Last Updated: Apr 14, 2016

In February 2013, the World Bank Group approved its first Country Partnership Strategy for Timor-Leste. This strategy, developed in consultation with various stakeholders, governs the World Bank Group’s program for between the 2013 and 2017 fiscal years.

The Country Partnership Strategy is aligned with the government’s own Strategic Development Plan, and is structured around three strategic areas and one crosscutting theme:

1. Improving the management and delivery of services in Education, Health and Nutrition, and Social Protection. The World Bank Group will help build the capacity of the government to deliver services to create an educated, healthy, employable and less vulnerable population. In particular, the Bank will focus on supporting decentralized service delivery in health and education, and improving the targeting and impact of social protection programs.

2. Building core infrastructure to connect communities to markets. This strategic area will develop core infrastructure to improve access to services, employment and markets, and to facilitate efficient and reduced-cost movement of people and goods. Support in this area will include lending, technical assistance, and investment and advisory services, and will set the stage for public-private partnerships for major infrastructure.

3.  Supporting economic development for a non-oil economy. The World Bank Group will assist Timor-Leste to build the foundations for a non-oil economy that can eradicate poverty, create jobs, and improve livelihoods. It will emphasize development of a productive agriculture sector, and support private investment and reduced transaction costs for business, including tourism. This work also focuses on districts that are crossed by Timor-Leste’s road corridors to maximize the economic impact of road improvements, demonstrating a more integrated path for rural development.

4.  Strengthening institutions for quality of spending. This cross-cutting theme will focus on strengthening institutions to improve the quality of spending, both across government and in the specific sectors addressed by this Country Partnership Strategy. All activities in the strategy will contribute, directly or indirectly, to improving the quality of spending of government ministries. Through improvements in institutional capacity, the Bank will support the government to efficiently execute its substantial capital investment, improve the quality of planning through better use of data, and strengthen systems to prepare for budget support in subsequent Country Partnership Strategyperiods.

Last Updated: Apr 14, 2016

Since 2009, the World Bank has been assisting the Government of Timor-Leste to rebuild national infrastructure, stabilize the economy and strengthen government institutions. Some of the achievements from the Bank’s continued support include:

Disaster Risk Management: The World Bank is helping communities along the Dili-Ainaro Road, one of Timor-Leste’s most vital mountain highways, reduce the impacts of natural disasters – in particular recurring landslides and floods – through the Road Climate Resilience Project. This has involved essential emergency works in some of the most critical parts of the road where traffic movement has been difficult during Timor-Leste’s rainy season. Seven different locations along the Dili-Ainaro Road have now been completed, with the whole project expected to be finished by 2018. The Community-Based Disaster Risk Management Project will train community members from approximately 26 villages in various aspects of community-based disaster risk management. Comprehensive village-level disaster management plans will be prepared, supported by small–scale construction and agriculture projects that will aim to reduce disaster risks and will be piloted in all participating villages.

Budget Execution and Resources Management: Financial Management Information, procurement, and treasury systems have been simplified and strengthened, with an increased delegation of responsibilities to line ministries. This has improved efficiency and helped dramatically improve the delivery of Ministry budgets. At the same time, Timor-Leste’s government transparency is also improving through digitization of records, and the output of regular reports on how the budget is delivered. The World Bank partnered with the government to review the quality of infrastructure spending, focusing on electricity, irrigation and roads.

Health: The World Bank and other partners have supported the Government of Timor-Leste to rehabilitate and reconstruct essential health infrastructure across the country. This has included the central hospital in Dili, four of the five regional referral hospitals and the construction of a large number of health centers. In addition, World Bank-administered programs have supported the operation of mobile clinics to service remote areas of the country, with the supply of medical equipment and medicines also improved. This support to Timor-Leste’s health system has contributed to a significant increase in the number of people visiting health centers and hospitals in the years since independence (2002), as well as increased outpatient visits and midwife-assisted births, and increased child immunization rates. Significantly, infant and child mortality have both also halved since 1999.

Management of Petroleum Resources: The World Bank has supported the Timor-Leste Government to establish a petroleum regime that is internationally-competitive. Timor-Leste was declared compatible with the international Extractive Industries Transparency Initiative, which aims to increase the accountability of governments and companies in the mining and petroleum industries. As the third World Bank member country to achieve this status, Timor-Leste has set benchmarks for other developing countries in transparency and accountability.

Social Protection: Through the Social Protection Administration project, the World Bank supported the Timor-Leste Government’s Ministry of Social Solidarity to improve cash transfer and other social assistance processes by building reliable databases and better tracking of payments to community members.

Education: The World Bank has worked with the Ministry of Education to rebuild or rehabilitate 2,172 classrooms, with all Timor-Leste schoolchildren in grades 1-3 now having access to learning materials and classroom furniture. Furthermore, through the Second-Chance Education Project, more than 1,200 young people outside of school age who, due to the country’s conflict did not have the opportunity to complete their schooling, are able to complete recognized equivalency programs.

Last Updated: Apr 14, 2016