The Democratic Republic of Timor-Leste : Public Expenditure Review
The specific objectives of the Public Expenditure Review (PER) were to: increase the poverty reduction impact of the expenditure program through an emphasis on service delivery and accountability at all levels; and stimulate transparency and enhance accountability through improved availability and dissemination of information on expenditure issues. Following the broad objectives laid out in the National Development Plan (NDP), the Government of Timor-Leste has sought to restrain expenditures at sustainable levels and ensure that expenditure allocations are consistent with the NDP's development priorities, giving particular priority to basic education and health services. The core financial management system compares favorably with that of other low- income countries and fiduciary arrangements are basically sound, if still incomplete, but agency level financial management systems are often rudimentary and the viability of the system as a whole is threatened by the scheduled departure of key expatriate personnel. Furthermore, improvements in agency level expenditure and procurement planning, together with improvements in procurement administration, will be needed if the Government is to bring budget execution in line with appropriations and improve service delivery. Timor-Leste faces three main challenges in developing the civil service in the post- Independence era: controlling the size of the civil service, developing an appropriate pay policy, and establishing basic, but critical, management systems. Key issues and strategic directions in education include improving access, efficiency, and quality will involve a combination of supply-side and demand-side interventions. As the education system shifts from reconstruction to longer-term development, expenditure policy will need to focus on aligning resources toward established policy objectives while accommodating a gradual reduction in external financing. Basic management systems and mechanisms for channeling resources directly to schools will be critical if budget execution rates are to improve. In the road transport sector, the main challenge is to create and implement a strategy for sustainable provision, rehabilitation and maintenance of roads. With regard to the health sector, the Government of Timor-Leste has made significant progress in re-establishing health services and can now turn its attention to operationalizing health sector strategies. A revised service configuration recognizes financial and human resource constraints while maximizing the percentage of the population with access to primary health care. In general, health sector expenditures are generally in line with sector priorities, with hospital and specialized services spending capped at around 40 percent of Consolidated Fund expenditures.