Timor-Leste’s economy at ‘turning point,’ says top UN envoy

7 April 2010

Timor-Leste’s economy is on the cusp of moving from recovery to development, the top United Nations envoy to the fledgling nation said today, stressing the need for an economic expansion that is not based only on oil revenues.

“Policies and strategies should be directed to move the economy from oil-based to non-oil-based development for sustainable growth, particularly in rural agriculture,” Ameerah Haq, the Secretary-General’s Special Representative, said at a gathering in the capital, Dili.

During a visit to Timor-Leste last week, renowned development economist Jeffrey Sachs called for bolder and more fiscally responsible withdrawals from the Petroleum Fund, still the Timor-Leste’s only major source of income and worth nearly $5 billion as of last June.

These resources, he said, should be used to invest in human capital and productive physical assets to support strong socio-economic development in the coming years.

But to do this, Mr. Sachs noted, will require an implementation strategy, a managerial team and control mechanisms that do not currently exist, he said.

“Much has been said about the Government’s capacity to spend its budgetary resources and much progress has been made in the past couple of years but more can and should be done!” Ameerah Haq, the Secretary-General’s Special Representative, said today.

She added that if the capacity needed is not available locally, it should be procured from outside Timor-Leste.

“There are clear signs of prosperity in Dili and other urban areas,” Ms. Haq told a meeting of the country’s top officials, including Prime Minister Xanana Gusmão, and development partners, such as the Asian Development Bank and the World Bank.

“Timor-Leste’s development challenges are enormous. But they can be overcome.”

The Government of Timor-Leste, which the UN shepherded to independence in 2002, has made great strides in promoting macro-economic stability and pursuing prudent fiscal management, the Special Representative said, calling for support for such public sector programmes as absorbing youth unemployment through labour-based public works schemes.

For its part, the international community’s assistance continues to be vital, she said, underscoring the importance of not just financial aid, but participation in a Timor-Leste-led policy dialogue.

The UN peacekeeping mission in the country, known as UNMIT, is slated to begin drawing down in 2012.

As the mission proceeds with its gradual drawdown, socio-economic priorities – including basic social services and stepping up investment in human capital – will “increasingly take centre stage,” Ms. Haq said.

“Indeed, a renewed emphasis on building the human and institutional capacity of this country is a precondition to long-term peace, stability and prosperity,” she added.

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