Timor-Leste

Timor-Leste: new strategy highlights successes while calling for action to consolidate on progress

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Dili, July 26, 2005 - The Board of Directors of the World Bank has endorsed a Country Assistance Strategy for Timor-Leste that highlights the new nation's remarkable achievements while also striking a note of caution on the need to consolidate this early progress.

"Timor-Leste is at a crossroads today," said World Bank Country Manager for Timor-Leste Ms Elisabeth Huybens. "It has a window of opportunity to realise its national vision for poverty reduction as outlined in its own National Development Plan (NDP). It is blessed with rich resources and natural beauty but it must be vigilant in avoiding the tragic mistakes of some young nations whose wealth has proved to be a liability."

Under the newly endorsed strategy, the World Bank will anchor a multi-donor grant program to support the goals of the NDP of: a) Creating productive employment (b) Delivering sustainable services and (c) Strengthening governance, while mainstreaming gender and youth across these three strategic pillars. The CAS will further adopt four principles of engagement to meet its targets: building institutional capacity, deepening the results orientation, strengthening transparency and communication and consolidating and extending the strong international partnerships.

Widely credited for having made a successful transition to peace, Timor-Leste has made major progress in building a new nation, including holding free and fair elections, adopting a new Constitution and establishing the institutions needed to ensure good governance. The Government has made progress in the key petroleum sector with Parliament's unanimous adoption of the Petroleum Fund Act. The act embodies state-of-the-art petroleum revenue management arrangements for Timor-Leste's rapidly growing petroleum revenues. Much of this is the result of closely coordinated efforts between the Government and the international donor community which participates regularly in reviewing mutually agreed goals.

'Despite its new-found oil wealth, the country has emerged as one of the poorest in the world with non-petroleum GDP at US$366. Low capacity in government institutions, high unemployment among youth coupled with the world's highest fertility rate of 7.8 are among the serious challenges facing the country. "There is no doubt that this new nation faces many challenges," says Elisabeth Huybens. "But its leaders have learned from the experience of some oil-rich countries and are making every effort avoid the same mistakes. As a result, oil revenues flowing to Timor-Leste will be carefully managed so that the wealth created is passed on to the whole population over generations to come."

Against this backdrop, and in accordance with the Government's implementation plan for the NDP, the World Bank will anchor a grant program of approximately $US 25 million for the first two years of the Country Assistance Strategy. Using the successful Transition Support Program model (now renamed the Consolidated Support Program or CSP) the World Bank will work in collaboration with donors to implement the Government's Sector Investment Programs in health, education, agriculture, and private sector development, and considerably extend its involvement in energy. The CAS will also support the Planning and Financial Management Capacity Building Program to help improve execution of the growing budget with a focus on labor-intensive programs to increase non-petroleum GDP in the short run and create jobs.

For more information please visit www.worldbank.org/tl.

Contacts:

in Dili
Luis Sequeira
(670) 723 0554
lsequeira@worldbank.org

in Sydney
Elisabeth Mealey
61-2-9235 6331
emealey@worldbank.org