In May 2002, Timor-Leste (formerly known as East Timor) gained independence. Violence had left the country and families torn apart, nearly 70 per cent of all buildings, homes and schools destroyed, and an estimated 75 per cent of the population was displaced.
During April-May of 2006, there was a rapid deterioration of security. Serious violence caused the displacement of around 150,000 people in the capital, Dili and the surrounding areas, and the government subsequently requested military assistance from neighboring countries and humanitarian and police assistance from the United Nations. In 2006, the economy contracted by an estimated 5.4 per cent, and there were significant increases in poverty levels across the country.
Despite the challenges, Timor-Leste has progressed, particularly due to their endowment of natural resources. With the petroleum revenue boom, fiscal policy since 2005 has been expansionary. In 2007-08 the government increased spending on public transfers and infrastructure to address the pressing need to ensure social and institutional stability following the 2006 crisis.
The economy continues to grow rapidly on the back of government spending. These developments are starting to contribute to poverty reduction and improved social outcomes.
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 social and economic development in Timor-Leste can be seen as remarkable.
The 2011 budget provides a strong indication of priorities for the government’s upcoming Strategic Development Plan. The investment strategy is expected to focus strongly on major infrastructure, skills, and other structural gaps, seeking to generate increased and sustainable private sector investment as a means to enhance job opportunities and reduce poverty for the people of Timor-Leste.
In February 2013, the World Bank Group approved its first Country Partnership Strategy (CPS) for Timor-Leste. This strategy, developed in consultation with various stakeholders, governs the World Bank Group’s program for the fiscal year of 2013-2017.
The CPS is structured around three strategic areas and one crosscutting theme which are:
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.
Building Core Infrastructure to Connect Communities to Markets. This strategic area will develop core infrastructure to enhance 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 IFC investment and advisory services, and will set the stage for public-private partnerships for major infrastructure.
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 to private investment and reduced transaction costs for business, including for tourism. Interventions on the ground will focus on districts crossed by the road corridor to maximize the economic impact of the road and to demonstrate a more integrated path for rural development.
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 CPS. All activities in the CPS 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 CPS periods.
As of April 2013, Bank cumulative lending (IBRD and IDA) to Timor-Leste was over $58.62 million for 9 active projects.
Since 2009, the World Bank has been assisting the Government of Timor-Leste to help rebuild national infrastructure, stabilize the economy and build up strong government institutions. Some of the achievements from the Bank’s continued support are:
Education: The World Bank has worked with the Ministry of Education to rebuild or rehabilitate 2,172 classrooms.
All schoolchildren in grades 1-3 now have access to vital learning materials, with early grade schools each provided with 148 learning aides. The completion rates for primary school has increased from 73 percent in 2009 to over 83 percent in 2012, which exceeded the original target of 80 percent.
Health: The World Bank and its donor partners supported the Government in rehabilitating and reconstructing essential health infrastructure. This included the central hospital in Dili, four of the five regional referral hospitals based in the districts and the construction of a large number of health centers. In addition, Bank administered programs have supported the operation of mobile clinics to service remote areas of the country. The supply of medical equipment and drugs was also enhanced. Improvements to the health system contributed to a near doubling of the number of people visiting health centers and hospitals, increased outpatient visits and midwife assisted births, and increased child immunization rates. Infant and child mortality have both declined by over 40 percent.
Agriculture: The World Bank works with the Ministry of Agriculture, Forests and Fisheries to support farmers in improving upland farming and conservation techniques; rehabilitate small and large irrigation schemes; improve access to agribusiness and market information, and deliver livestock health services. Almost 4000 hectares of agricultural land was rehabilitated in 46 community based irrigation schemes. This comprises 2.4 percent of the country's arable land. More than 380 village livestock workers were trained and about 80 percent of livestock vaccinated against disease. In addition, substantive support has been provided to strengthen the institutional capacity of the Ministry.
Budget Execution and Resources Management: The Planning and Financial Management system in Timor-Leste has undergone significant reforms. Financial Management Information, procurement, and treasury systems and processes have been simplified and strengthened, with an increased delegation of responsibilities to line ministries. This has improved efficiency and enabled a dramatic rise in budget execution. At the same time, government has tried to promote transparency through computerization of records and provision of regular reports on budget implementation.
Management of Petroleum Resources: The World Bank supported the government in establishing 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 resource management throughout the world. As only the third World Bank member country to achieve this status, Timor-Leste has set benchmarks for other developing countries in transparency and accountability in this regard.
Veteran integration: The World Bank supported the Government in developing policies to help alleviate the concerns of veterans. This enabled the registration of 75,000 veterans, allowing thousands to receive pension payments.
Youth Opportunities: The World Bank’s Youth Development Project is working with government to promote youth empowerment and inclusion. To date, the project has achieved significant results, providing youth grants for a total of 274 projects, including 23 grants to rebuild or rehabilitate youth centres; 50 grants to provide training, and others for a variety of youth-led community activities. Over 182 projects have been completed, including: the rehabilitation of youth centres, development of sporting fields and community infrastructure.