EU-East Timor Partnership

Farmers walk along bad roads to sell their produce in local markets in East Timor. The European Union's partnership program with the country will focus on supporting good governance and rural development through 2020. Photo by: International Labor Organization / CC BY-NC-ND East Timor has shown commendable success since garnering independence in 2002. According to the World Bank, the government’s successful utilization of its Petroleum Fund has led to a significant decline in infant and child mortality rates, improvements in health and education, robust economic growth, increased levels of civic participation and continued strengthening of state institutions including the ministry of finance, ministry of defense, the police, courts and the judiciary. But much remains to be done. Having emerged from several years of conflict, East Timor needs to continue solidifying governance, secure its economic base and rehabilitate basic infrastructures to stay on its upward path. In preparing its latest indicative program for East Timor, the European Union has identified challenges in the government sector including the need to consolidate democracy and further the capacities of state institutions. The EU also notes that although the country has made a lot of progress, development still needs to be more inclusive, citing high levels of poverty, malnutrition and unemployment in rural areas. This is a huge cause for concern as over half the country’s population lives in rural communities. From 2007–2012, the country’s gross domestic product growth averaged 11.3 percent. But although this is an impressive figure, it is likewise a very precarious one considering outputs from the oil industry contributed to 80 percent of GDP growth. This perceived progress was hardly inclusive as half the population remained below the national poverty line by the end of this high-growth period. Economic diversification is therefore of key importance in effectively reducing poverty, especially since the International Monetary Fund noted that oil production could end within the next decade. Funding levels and priorities The government of East Timor is currently implementing its strategic development plan which focuses on rapid and inclusive growth, improving infrastructures, developing worker skills, strengthening education and health systems as well as reducing poverty and malnutrition. The EU has earmarked 95 million euros ($106.74 million) to help the government reach its objectives. The amount will be financed under the 11th European Development Fund and will cover macroeconomic support, sectoral policies, programs and projects for fiscal years 2014–2020. A second funding envelope will also be made available for unforeseen expenditures which can include humanitarian aid, emergency response and recovery efforts, and debt relief contributions. The amount for this envelope, however, will only be determined as the need arises. Both aid envelopes may be revised on the basis of midterm and end-of-term reviews. For this partnership period, the EU will focus its resources in areas of good governance and rural development. Good Governance The EU intends to finance capacity building activities for oversight bodies to increase efficiency, transparency and accountability while also improving the quality of public services. State and non-state institutions including the parliament, chamber of accounts, anti-corruption commission, the office of the ombudsman, and media and civil society organizations will be targeted for support. Attention will also be given toward improving public finance management, particularly by strengthening areas of budget planning and execution, custom and domestic revenue collection, internal and external audit, accounting, revenue reconciliation and debt management. Support will also be provided for efforts in fiscal decentralization. Rural Development About 60 percent of the total EU funding will be directed toward rural development with the overall objective of improving socio-economic conditions in rural areas through greater access to markets and services, better employment opportunities, and by reducing food insecurity and malnutrition at the district level. The agricultural sector will be targeted for support to increase work opportunities and incomes for the rural population. This entails developing skills for production as well as increasing outputs for livestock, fisheries, forestry and selected crops. The EU also aims to strengthen policies and institutional frameworks in agriculture as well as scale up natural resource conservation and management. Broadening access to foreign and local markets and increasing added value to agricultural products will also be a focus. Supporting the agriculture sector is likewise expected to contribute toward reducing malnutrition and micronutrient deficiency among children and women, as majority of rural dwellers rely on subsistence farming. Other efforts to improve nutrition and overall health include strengthening hygiene practices and broadening access to water and sanitation services, building capacity for cross-sector nutrition initiatives, strengthening policies, and improving optimal nutrition behavior and practices. Finally, the EU intends to contribute to the rehabilitation and maintenance of rural roads by implementing capacity building and labor-based programs to ease transit to and from rural communities. Support Measures The EU has committed 8 million euros to finance complementary activities for program implementation and institutional support for the national authorizing officer. For programmatic support, the funding will strengthen program design and preparation, implementation, monitoring and evaluation, as well as finance visibility activities. Meanwhile, support for the national authorizing officer will contribute toward proper management of EU funds and improve overall operations through the provision of technical assistance, staff, office equipment, training and project monitoring missions. The EU also notes that support measures may also include assistance for Timor-Leste’s accession into the ASEAN, as well as strengthening government capabilities to meet its commitments for accession. Devex Analysis The EU recognizes that East Timor is still in a transitory state, being a lower-middle-income country and one that continues to have a propensity for conflict. As such, the 28-country bloc intends to engage East Timor by working tightly with its government while concerting efforts with EU member states. Policy dialogues will be a crucial element of this partnership strategy, as the EU intends to fully align its interventions with the government’s long-term development agenda. The EU favors budget support for government initiatives as its method of assistance for East Timor, citing the importance of the country’s ownership of development policies and reforms. Further, the EU intends to move away from a project-based approach to what it calls “a genuine sector policy partnership.” This entails higher collaboration between the EU and East Timor in areas of planning, budgeting, implementation, as well as monitoring and evaluation of the country’s development plan. Assuming the country continues to be eligible for budget support, the EU intends to increase levels of aid to support key sectors through these measures. Regarding future priorities, the EU will continue to focus on increasing domestic revenues from nonoil activities, combatting corruption, aligning the government’s budget allocations with focal sectors and monitoring the impact of development initiatives in East Timor. Capacity building for public institutions as well as civic organizations will also continue to figure prominently in the EU’s strategy. Specifically, this means implementing more technical assistance measures, co-financing of development activities and delegated implementation, with keen focus on transferring knowledge and skills to national staff. Contact Delegation of the European Union to Timor-Leste Tel: (+670) 331-1580 Fax: (+670) 331-1581 Email: