Economic Overview -Timor Leste

Over the past decade, Timor-Leste has created the conditions for successful development. It has credibly emerged from a crisis of internal violence and political instability in 2006-2007 and increased tangible services for the population, creating hard-won political stability, absence of conflict and a new confidence in the state. Largely peaceful democratic elections for the presidency and the parliament since 2012 reflect these achievements.
After 14 years of independence, Timor-Leste has achieved tremendous progress – drawing down money from the Petroleum Fund and channeling it through the budget to meet pressing needs. The effectiveness of this process is evident in the near-halving of infant and child mortality rates; significant gains in health and education; economic growth to rival regional neighbors; increasing citizen participation, and; the gradual strengthening of state institutions.
Ensuring Timor-Leste’s young people are educated, healthy, and productively employed are arguably the biggest development challenges facing Timor-Leste over the next decade. With 60% of the population under 25 years of age, Timor-Leste is one of the youngest countries in the world. Benefitting from high global oil prices, the country achieved lower middle-income status in 2011, but poverty remains high, particularly in rural areas, where the majority of the population lives.
To create job opportunities for youth, sustain inclusive growth, and prepare for a future of potentially declining natural resource returns, Timor-Leste needs to diversify its economy and sources of revenue, elevate the quality of health and education services, and equip the population with viable skills. These efforts must be underpinned by capable institutions with a strong and consistent focus on quality of spending and policies that nurture private investment.
The World Development Report 2011 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 Timor-Leste’s social and economic development can be seen as remarkable.
The government’s Strategic Development Plan for 2011 – 2030 offers a vision, targets and indicators for the next two decades. It is built around four pillars:
i.        Social capital: health, education and social protection;
ii.       Infrastructure: transport, telecommunication, power, and water supply and sanitation;
iii.       Economic foundations: targeting three sectors for development – agriculture, tourism and petrochemicals – to bring about growth, jobs, and new sources of public revenues beyond oil; and
iv.        Institutional framework: focusing on macroeconomic management and improving the capacity and effectiveness of government institutions.
Last Updated: Apr 14, 2016
Sources: The World Bank 


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