Timor-Leste is a Rich Country, but also a Poor One: The effect and effectiveness of public transfer schemes

Abstract

This chapter outlines how Timor-Leste’s resource revenues are managed and how they are being spent via the public transfer schemes. It considers the effect and effectiveness of the public transfer schemes, focusing on questions about their role in poverty alleviation, their administration, their sustainability and their politicization. The chapter argues that Timor-Leste should consider redesigning its public transfer schemes to improve the likelihood that transfers contribute to long-term poverty alleviation and development goals and avoid political manipulation. Public transfers to veterans run the greatest risks of politicization. The Timor-Leste Constitution provides that natural resources are owned by the state, which should use them ‘in a fair and equitable manner in accordance with national interests’. The decisions of the Alianca Maioria Parlamentar and Bloku Governu Koligasaun governments to consistently draw down from the Petroleum Fund the Estimated Sustainable Income have raised questions about the sustainability of the Fund.