In May 2002, Timor-Leste (formerly known as East Timor) became the world’s youngest nation. 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%, 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 latest research on conflict and post-conflict states, the most recent World Development Report  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 StrategicDevelopment 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.

The current World Bank Interim Strategy Note (ISN) for Timor-Leste covers the fiscal years 2010-2011, and targets four key areas of support to the Government: formulating a new national development strategy; building capacity to implement the new strategy; putting in place activities for short-term social and economic stabilization; and securing long-term economic growth.

As of March 2011 the World Bank Group, including the International Finance Corporation (IFC), is supporting nine active projects with a total commitment worth $28.6 million. These projects aim to:

• Support the development of the public financial management system;
• Increase transparency in the management of petroleum resources;
• Build a more effective health care system;
• Develop the education sector;
• Increase energy provision to the people of Timor-Leste;
• Enhance the ease of doing business and develop the private sector;
• Enhance agricultural productivity and rural incomes;
• Support war veterans;
• Promote leadership and communication and develop a framework for youth policy and inclusion.

The World Bank is currently undertaking discussions on the next Country Assistance Strategy.

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:

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.

Education: The World Bank has worked with the Ministry of Education to rehabilitate 2,780 classrooms in 535 schools and build 102 new education facilities.  By 2012 there will be around 65,000 new school places for students attending both primary and secondary schools. Primary enrolment has increased by 46 percent over the last four years, with an increase of more than a third at the lower secondary level over the last two years.

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.

World Bank Office in Dili
Avenida dos Direitos Humanos
Dili, Timor-Leste

Sydney
For media enquiries:
Aleta Moriaty, World Bank
Phone: (+61 2) 9235 6550
E-mail: amoriarty@worldbank.org

Washington, D.C.
Mohamad Al-Arief
Phone: (202) 458-5964
Email: malarief@worldbank.org

Last Updated: June 2011