Trust Fund for East Timor (TFET)

 

Report of the Trustee

and

Proposed Work Program for June – December 2004

 

Donors’ Council Meeting

May 17, 2004

 

Executive Summary

 

          i.      The multi-donor Trust Fund for East Timor (TFET) has supported reconstruction and development activities in Timor-Leste since the beginning of 2000. Since the last Report of the Trustee in December 2003, 408 hectares of irrigation schemes and 22 km of roads were rehabilitated under the Second Agriculture Rehabilitation Project; the disbursement of the third cycle of village grants under the Community Empowerment Project was completed, reaching about 292,633 beneficiaries for 636 projects mostly for the rehabilitation of feeder roads, water points and small irrigation schemes; with the help of the Fundamental School Quality Project a National Education Policy was drafted and submitted to the Council of Ministers, and 10 new primary schools and one Escola Basica were constructed; the preliminary design for new hospitals in Dili, Maubisse, Oecussi and Maliana was finalized and 5 Community Health Centers were completed under the Health Sector Rehabilitation and Development Projects; the portfolio of the Instituiçao de Microfinanças increased to USD 755,500; the Petroleum Technical Assistance Project contributed to increased Government revenues by improving audits of Timor Sea taxpayers; and the Small Enterprises Project rehabilitated 8 markets and delivered training in Entrepreneurship Development and Market Management to a total of 250 people.

        ii.      The quality of the TFET portfolio has improved considerably since the last report and   disbursement has accelerated. All projects are now classified satisfactory for both development objectives and implementation progress. Only the Small Enterprises Project continues to have an unsatisfactory rating for financial management; a new full time Financial Manager for SEP took up his position in March and the financial management rating is expected to be upgraded to satisfactory during the next supervision mission.

       iii.      All projects, whether in the pipeline or active, are presently being aligned with the Government of Timor-Leste’s Road Map for Implementation of the NDP, the Stability Priorities and the Sector Investment Programs. In addition, where feasible, construction methods and procurement procedures are being adapted to ensure enhanced local content without affecting quality.  Ownership and capacity building are given special attention by gradually integrating Project Management Units into line ministries and by devolving responsibilities to line ministry personnel, with assistance from international advisors where necessary. The Procurement Division of the Ministry of Planning and Finance has assigned two of its staff to every TFET project for training, hence ensuring a significant TFET contribution to capacity building in the area of procurement.

          iv.          As of March 31, 2004, USD 177.57 million[1] had been contributed to TFET and USD 177.27 million had been committed to projects. Thus, TFET is running a small surplus of approximately USD 0.3 million. In alignment with the Sector Investment Programs, the Government has expressed its preference to allocate this surplus to the Priority Power Investment Project, for the urgent repair of the MAK 4 generator, and other investments in the Dili power distribution system, allowing the Government to make further savings on subsidies to the Power Authority.     It requests that the Donor Council endorse this allocation on a no-objection basis.