In May 2002, Timor-Leste (formerly known as East Timor) gained independence. Violence had left the country and families torn apart, nearly 70 percent of all buildings, homes and schools destroyed, and an estimated 75 percent of the population was displaced.
Over the past decade, Timor-Leste has created the preconditions for successful development. It has credibly emerged from a crisis of internal violence and political instability in 2006/7, built a coalition, and increased tangible services for the population, creating a hard-won political stability, absence of conflict and a new confidence in the state. Reflecting these achievements, it underwent largely peaceful democratic elections for President (March and May 2012) and Parliament (June 2012)
Educating, keeping healthy, and productively employing its young population are the biggest development challenges facing Timor-Leste in the next decade. With 60 percent of the population under 25 years of age, the demographics are daunting. Reaping the benefits of high global oil prices, Timor-Leste achieved lower middle-income status in 2011, but poverty remains persistently high, particularly in the 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. In order for these efforts to be successful, they 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 social and economic development in Timor-Leste 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, which is comprised of health, education and social protection; (ii) Infrastructure, including transport, telecommunication, power, and water supply and sanitation,; (iii) Economic foundations, which targets three sectors for development – agriculture, tourism and petrochemicals – to bring about non-oil growth, jobs, and new sources of public revenues; and (iv) a cross-cutting theme focused on macroeconomic management and improving the capacity and effectiveness of government institutions.