Overview

In May 2002, Timor-Leste (formerly known as East Timor) gained independence. Violence had left the country and its families torn apart, with nearly 70%of all buildings, homes and schools destroyed, and an estimated 75%of the population 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 2006-2007, built a coalition, 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 President (March and May 2012) and Parliament (June 2012) reflect these achievements.

In February 2015 Timor-Leste’s Prime Minister since independence, Xanana Gusmão, voluntarily stepped down and was replaced by Dr. Rui Araujo, a member of the opposition party FRETILIN and a trained medic. Xanana Gusmão remains in the Government as the Minister of the newly created Ministry of Strategic Planning and Investment.

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, Timor-Leste is one of the youngest countries in the world. Benefitting from high global oil prices, Timor-Leste achieved lower middle-income status in 2011, but poverty remains persistently 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 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.

Last Updated: Apr 02, 2015

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 years 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.

Last Updated: Apr 02, 2015

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. Through the second-chance education project, 949 out-of-school youth and young people have completed recognized equivalency programs.

Budget Execution and Resources Management: 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. The World Bank has provided extensive support to the Government to review the quality of infrastructure spending in Timor-Leste, focusing on the electricity, irrigation and road sectors.

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.

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 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.

Disaster Risk Management: The World Bank is helping communities and local level agencies along the Dili-Ainaro road corridor to reduce the impacts of natural disasters – in particular recurring landslides and floods. The Community-Based Disaster Risk Management will train officials and community members from approximately 26 sucos on various aspects of community based disaster risk management. Comprehensive suco level disaster management plans will be prepared and small scale projects to reduce disaster risks will be piloted in the sucos.

Youth Opportunities: The World Bank’s Youth Development Project worked with the government to promote youth empowerment and inclusion. At the project’s completion all targeted communities reported an increased youth participation in local and community development activities; approximately 20,000 young people (37% female, and 63% male) participated in decision-making meetings to determine sub-project activities and design, and; 289 sub-projects were developed and implemented by young people.

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

Last Updated: Apr 02, 2015