Poverty and Timor-Leste s Economic Development Strategy. David Freedman Country Economist, Timor-Leste Resident Mission 05 November 2014

Transcription

1 Poverty and Timor-Leste s Economic Development Strategy David Freedman Country Economist, Timor-Leste Resident Mission 5 November 214

2 Outline 1. Taking stock Trends in public spending, poverty and nutrition 2. Looking ahead Budget and revenue projections Strategic sectors 3. Some suggestions

3 The surge in public spending since 27 has lifted non-oil GDP, but households consumption has risen more slowly.. $ million 1,6 1,4 1,2 1, Salaries and wages Goods and services Transfers Capital All categories $ 1,2 1, Non-oil GDP Per Capita Private consumption per capita Source: RDTL Budget books (various years), Timor-Leste Transparency Portal Source: Timor-Leste National Accounts 2-212

4 Timor-Leste Burkina Faso Myanmar Sri Lanka Korea, Dem. Rep. Maldives Kenya Lesotho Guatemala Malawi Guyana Syrian Arab Oman Albania China Venezuela, RB Jordan Kuwait Georgia Service delivery has improved, but improvements in childhood nutrition have been slower % Children under-5 stunted (low height for age) % Children under-5 underweight (low weight for age) % Children under-5 wasted (low weight for height) Source: Timor-Leste Demographic and Health Survey, 23, 29/1, Timor-Leste Survey Of Living Standards, 27, Timor-Leste Nutrition Survey, 213. Source: World Development Indicators

5 And despite rapid growth, formal employment opportunities are limited, and international competitiveness lags.. 3, Innovation Timor-Leste Institutions 6 ASEAN Average Infrastructure 2, Business sophistication 4 2 Macroeconomic environment 1, Market size Technological readiness Health and primary education Higher education and training Financial market development Labor market efficiency Goods market efficiency Source: Timor-Leste Labour Force Survey 213 (DRAFT) Source: World Economic Forum, Global Competitiveness Report

6 Declining oil revenues highlight the importance of fiscal sustainability and economic diversification.. $Million 4, 3,5 3, 213 Budget Forecast 214 Budget Forecast 215 Budget Forecast Historical Revenues 2,5 2, 1,5 1, Source: RDTL Draft 215 Budget, 214 National Budget, 213 National Budget

7 The draft 215 Budget plans for spending to remain above sustainable levels until $ million Salary and Wages Goods and Services 2,5 Public Transfers Capital Excess Withdrawals Sustainable fiscal envelope 2, 1,5 1, 5 $ million 25, 2, 15, 1, 5, Petroleum Fund Balance at year end ($million) Balance lost due to excess withdrawals f 215f 216f 217f 218f Source: RDTL Draft 215 Budget, authors calculations -1, -1,5 Source: RDTL Draft 215 Budget

8 Agriculture is a key sector for growth and poverty reduction.. GDP growth Agriculture Growth Agriculture TFP growth Per capita Income per year Population growth Poverty ($1.25 per day per capita) Viet Nam 6.9 % p.a. 3.6%* p.a. 2.2% p.a. $259 $1,235 Indonesia 4.9 % p.a. 3.% p.a. 1.8% p.a. $1,125 $3,112 Philippines 3.1 % p.a. 2.% p.a. 1.3% p.a. $1,699 $2, % p.a. 64 % in % in % p.a. 63% in % in % p.a. 35% in % in Southeast Asia Average Timor-Leste 5 Coffee Rice Maize Roots and tubers Vegetables Fruits Source: JICA / Centennial Group (212) ASEAN Dynamism: Agricultural Transformation and Food Security 24, Food and Agriculture Organization

9 Tourism can be an important source of income and employment.. Population ( ) 1,4 1,2 1, % of Labor force employed in tourism % Share of GDP 2, 4, 6, 8, 1, GDP Per Capita ($US) Fiji Mauritius Maldives Vanuatu Solomon Islands Fiji Mauritius Maldives Vanuatu Solomon Islands Timor-Leste Source: World Development Indicators Source: World Travel and Tourism Council

10 Tourism development in Timor-Leste 8, 6, 4, National Strategy focuses on eco, marine, historical and adventure tourism. Some good work done already: training, infrastructure, identification of key sites etc. Key challenge is to build partnership between government and the private sector: Work together to resolve constraints and grow the sector. Identify relevant models / lessons from other countries Investment facilitation Improved data (the two charts below are included to highlight issues with current data collection in particular the failure to distinguish between tourists and other visitors, and to survey the sector as a whole ) International tourist arrivals , Source: World Development Indicators 2 Number of Rooms Workforce Average mothly salary Average room price Source: Timor-Leste in Figures, 213, 29: Survey of large hotels

11 Some suggestions on the strategic approach.. 1. Look beyond non-oil GDP growth Quality Inclusiveness 2. Focus on quality / efficiency of public spending Capital investments - rates of return & sustainability Recurrent spending prioritize human development 3. Support diversification Provision of core public goods Sector strategies to solve coordination failures

12 Thank you