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Country Brief: Timor-Leste

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Timor-Leste: Building Resilience, Building Hope


Overview

In May 2002, Timor-Leste (formerly known as East Timor) became the world’s youngest nation. Conflict had exacted a heavy toll on the country and its people—families, homes, businesses and infrastructure were hit hard. Despite the many challenges, Timor-Leste has made remarkable progress over the last decade. The country has rehabilitated 535 schools, four regional hospitals and other infrastructure; it is helping realize the benefits of its natural resources; and it is investing in the Timorese people. The World Bank has supported Timor-Leste’s progress since the beginning, building resilience and opportunity for current generations, and generations to come.


Challenge

Timor-Leste has faced many difficult challenges. A decade ago, conflict caused real devastation, and nearly 70 percent of all buildings, homes and schools were destroyed. In 2006, there was again a rapid deterioration of security. Serious violence caused the displacement of around 150,000 people, and poverty increased. Today the country is growing rapidly largely on the back of strong petroleum exports, and is expected to experience strong growth in the years ahead. This growth is starting to translate into real gains for the Timorese people.


Timor-Leste’s progress in a short space of time is astonishing. Looking forward, the country is seeking to ensure that growth continues to translate into lasting and inclusive development. With one of the youngest and fastest growing populations in the world, this will also mean expanding opportunities for young people—the country’s greatest resource. Nonetheless, despite these achievements, poverty is still very high. Based on a World Bank report in 2009, Timor-Leste’s poverty figure was 41 percent. Timor-Leste’s progress toward the Millennium Development Goals (MDGs) had been hindered by the conflict that reoccurred in 2006. Although the current government had initiated various measures to tackle the issue of poverty and hunger including cash-transfer programs, the progress toward achieving that first MDG is off-track. However, there is progress on achieving universal primary education, promoting gender equality and reducing child mortality.


One of the main challenges for Timor-Leste’s development is the current conditions of its road network. The road condition is very poor in Timor-Leste and this road network is crucial to economic growth. The poor road condition hinders access of the Timorese people to much needed services, such as hospitals, schools and markets. Although the government has made a significant effort since independence in 2002, the road network in Timor-Leste, even in the capital Dili, is still in dire condition.


Approach

The World Bank has been working in Timor-Leste since the referendum in 1999, when it supported the immediate needs of reconstruction, restoration of essential services like health and education, and poverty reduction. After the troubles of 2006, the World Bank has been assisting the Government of Timor-Leste in rebuilding national infrastructure, stabilizing the economy, and helping to build up strong government institutions. A new Country Partnership Strategy (CPS), which will provide the framework for the Bank’s future engagement in the country, is being developed for the period 2012-2016. The CPS has been developed through consultation with more than 2,000 people, ranging from community leaders, women’s groups, students, and other organizations, to reflect the needs and desires of the Timorese population. The strategy will help support the ultimate goal of inclusive development through four pillars—connectivity and access, inclusive and effective health and education services, managing risk and vulnerability, and economic diversification.


International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD)-financed projects have supported and are currently working 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;
  • enhance agricultural productivity and rural incomes;
  • assist war veterans;
  • rehabilitate critical transport infrastructure; and
  • promote leadership and communication and develop a framework for youth policy and inclusion

Results

  • IDA worked with government to rehabilitate 2,780 classrooms in 535 schools and built 102 new education facilities. Primary and secondary enrollment rates improved. There was improved access to schools in remote rural areas, more children attended early classes and school dropout rates fell by 50 percent.
  • IDA supported the government in rehabilitating and rebuilding four of its five regional referral hospitals in the districts, as well as the central hospital in Dili. IDA also supported the construction of a large number of health centers and the operation of mobile clinics to service remote areas of the country. The supply of medical equipment and drugs was also enhanced. The number of outpatient health care visits nearly doubled during 2001 to 2007, life expectancy at birth increased from 56 to 61 years during 2000 to 2008, and infant mortality rates declined by 40 percent.
  • IDA worked with the government to rehabilitate and develop irrigation systems on 4,000 hectares of the country’s arable land, so people could grow crops and food, and vaccination of livestock was undertaken.
  • From 2007 to 2008, the World Bank—through an IDA grant—supported the government in developing policies to help the country’s veterans, which enabled the registration of 75,000 veterans, allowing thousands of them to receive pension payments.
  • IDA has also supported the government from 2002 to 2006 with technical assistance regarding shared petroleum resources, supporting Timor-Leste’s efforts to fully realize the benefits of its offshore resources and generate greater wealth for its people (over 1 million).
  • IDA has also supported Timor’s successful application and entry in the Extractive Industries Transparency Initiative (EITI), becoming the third EITI Compliant country in the world and first in the Asia-Pacific region. This accomplishment makes the country a global leader in providing transparent accounting of revenues and expenditures related to its oil resources. This initiative is seen as an important step for Timor-Leste to ensure that the income from the oil revenues would be used well for the greater benefit of its people and generations to come.   
  • Timor-Leste is also playing a growing global role in representing the shared interests of post-conflict countries on the international stage through the “g7+ initiative” and the World Bank is supporting this effort.
  • IDA-financed Youth Development Project is working with government to promote youth empowerment and expand opportunities for youth groups to initiate and participate in community and local development initiatives. From 2009 to date, the project has provided grants for 280 subprojects benefitting youth, including 23 grants to rebuild or rehabilitate youth centers in three districts and 50 grants to provide training in five districts. Over 277 projects been completed, including: the rehabilitation of youth centers, development of sporting fields and community infrastructure.
  • IDA has provided technical assistance to the Ministry of Finance since 2006 to strengthen its planning, budgeting, public expenditure management and revenue administration functions through the Planning and Financial Management Capacity Building Program (PFMCBP). This initiative led to a tenfold increase in spending between 2005 and 2010, which has enabled the government to deliver more services and undertake major public works activities to stimulate the economy during 2008-2009. This program is funded through an IDA grant and the multi-donor Trust Fund for East Timor.
  • The World Bank Group has made a significant contribution to the development of the legislative framework, contributing to the adoption of more than 44 laws in the last decade, ranging from the Petroleum Fund Law (2005), the Aviation Law (2003) and Law on Domestic Violence (2010).
  • The Public Information Center (PIC) in Dili provides the public with free information, information and communications technology (ICT) services and access to information on development and World Bank policies and projects. Since its inception in 2002, the PIC receives an average of 40 visitors every day, mostly high school and university students.

Voices


Huge institutional gains have been made with capacity building. All the public finance indicators have improved year on year since the program has been adapted in 2007. The success was based on trust, continual evaluation as to the needs of the ministry and ownership of the program to implement government reforms.  

— Finance Minister Emilia Pires referring to the Planning and Financial Management Capacity Building Program


Bank Contribution

As of March 2011,the World Bank, through IDA grants, was supporting nine active projects with a total commitment worth US$48.6 million. Projects are investing in various sectors including, health and education, youth development activities, infrastructure and public financial management.


Partners

IDA and the IBRD are working closely with its main partner, the Government of Timor-Leste through its relevant ministries. However, IDA/IBRD also maintains crucial partnerships with institutions and donors such as the Australian Agency for International Development (AusAID), the European Union, the Governments of Ireland, Norway, the United Kingdom, Portugal and the Asian Development Bank (ADB). AusAID has provided financial support for education and health projects contributing more than US$21 million alongside further financial support from European donors with grants no less than US$24 million. There is collaboration between the ADB, the Japan International Cooperation Agency (JICA) and the World Bank in the area of infrastructure, particularly rehabilitating the road network.


Toward the Future

The World Bank is currently preparing its latest Country Partnership Strategy, which is due to be finalized in 2012. In drafting this document, extensive consultations have been held with the government, development partners, and communities across the nation, and with the opposition to discuss priorities for development in Timor-Leste. Some projects or programs will continue into this period, particularly in education and health. The World Bank recognizes education and health as essential activities in Timor-Leste. The Social Protection Program is currently under preparation, in collaboration with the Ministry of Social Solidarity. In July 2011, IDA signed a US$20 million agreement with the Government of Timor-Leste to rehabilitate the vitally important north-south corridor road network. Currently, IDA is also supporting the Ministry of Finance in consolidating a new Procurement Law, part of the government’s efforts to help strengthen transparency and efficiency through a unified procurement system.


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