Timor-Leste: Support to the Strategic Development Plan

Timor-Leste is one of the world’s youngest countries, having gained full independence in 2002 following more than 400 years of colonial rule by Portugal and a quarter century of occupation by Indonesia. It is also one of the poorer countries in Asia, yet with tremendous potential for rapid development. Timor-Leste has vast oil wealth that it intends to invest in the infrastructure and human capital of the country. If successful, this kind of investment-led growth could spur extraordinarily rapid economic development. The challenge is to avoid the resource curse and carry out an effective Strategic Development Plan (SDP) that the Government is undertaking in the coming years.

From 2010-2011, CCSI and its Earth Institute partners, together with colleagues from the Natural Resource Governance Institute, advised the government of Timor-Leste in four areas: the legal framework for the hydrocarbon sector; the setup of sub-funds to the petroleum fund to channel investments for infrastructure and human capital development, and corresponding rules for transparent and targeted disbursements to allow the country to invest its resource wealth in national priorities; the drafting and adoption of a 20-year Strategic Development Plan (SDP); and the assistance in building multi-year planning capacity. Timor-Leste presents an opportunity to apply the five-pillar framework with profound development outcomes. The country’s $13.6 billion petroleum fund (as of June 2013) enables it not only to achieve the Millennium Development Goals (MDGs) by 2015, but also to put itself on a path to middle-income prosperity.

To support the implementation of the SDP, CCSI had one representative working full-time in the Macroeconomic Directorate of the Ministry of Finance to advise the Government on inflation, macroeconomic forecasting, fiscal sustainability and other macroeconomic issues as they arose. Specific outputs included a study (click here to view in presentation format) assessing growth potential and drivers of key endowment sectors in the country to provide the Government with policy options to achieve the targets set out in the SDP; policy briefs on the social support programs to ensure improved outreach and guarantee long-term sustainability; quarterly inflation reviews that monitored and explained price developments in the economy, and GDP growth projections based on an ICOR growth model developed within the Directorate.