Press Release No. 05/143

Press Release: IMF Executive Board Reviews the Democratic Republic of Timor-Leste's Poverty Reduction Strategy Paper and Joint IMF-World Bank Staff Advisory Note

June 20, 2005

The Executive Board of the International Monetary Fund (IMF) reviewed on June 15, 2005 the Democratic Republic of Timor-Leste's National Development Plan (NDP) and the Staff Advisory Note for the NDP, which was prepared jointly by the staff of the IMF and the World Bank.

At the conclusion of the Board discussion, Takatoshi Kato, Deputy Managing Director and Acting Chair, stated:

"Timor-Leste's National Development Plan (NDP) and implementation documents (the Road Map and the Sector Investment Programs (SIPs)) set out a comprehensive long-term vision and strategy for economic growth and poverty reduction, and reflect nation-wide consultations with a broad range of stakeholders. The NDP's overriding objectives will be supported by sector strategies and a macroeconomic and medium-term expenditure framework to guide policy development and implementation. The strategy rests on four pillars: creation of opportunities for economic participation; delivery of basic social services; provision of security of person and property; and empowerment of citizens and communities. The private sector is identified as the driving force for growth, with the government as the facilitator, including through the execution of well-focused public investment programs aimed at basic service delivery and the establishment of essential infrastructure.

"Since regaining independence in 2002, Timor-Leste has made commendable progress by maintaining peace and stability, building state institutions, and improving basic service delivery. Significant challenges remain, however, in addressing weak capacity, accelerating growth and employment creation in the non-oil economy, and ensuring the sound management of the country's oil/gas resources. The authorities' priorities therefore appropriately focus on further strengthening institutional capacity to address difficulties in budget execution, particularly for capital projects; measures to complete the legal and regulatory framework needed to stimulate private investment and job creation; and the enactment of the system to manage Timor-Leste's new oil/gas wealth responsibly and transparently.

"Continued assistance from and close coordination with development partners remain critical to support strengthening the government's capacity to design, manage, implement and monitor Timor-Leste's policies and budgets and to ensure the alignment of external assistance with national priorities. In particular, support will be essential to develop a comprehensive program for strengthening public finance management and ensure proper budget execution in support of NDP objectives," Mr. Kato said.