Jnited Nations

Transitional Adminxstration

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Executive summary

The conference is The Brussels donor conference is key to maintaining international key to build support support for the Timorese transition strategy. This background paper for the transition reports on progress to date against the main performance indicators

requested by donors at the Lisbon meeting. The paper also outlines an integrated strategy (Table 1) to create a public and private sector environment in which the political transition to an independent state can proceed in a stable and sustainable manner. The current status of the plan for a political transition will be presented directly to the Brussels meeting.

Project execution has accelerated

At Lisbon in June donors and the Timorese leadership outlined a need for increased emphasis on accelerated project implementation and Timorese participation in decision-making before, the next donor meeting. Development project implementation has accelerated in the intervening months, with disbursements under the Trust Fund for East Timor, UN agency and bilateral programmes increasing. Activities are well underway in the core government sectors of education, health, agriculture and infrastructure.

Progress has not been perfect. Delays were experienced in school and road rehabilitation during the critical dry season period, but

Progress has not these programmes are now implementing at a fast pace and are been perfect, but is estimated to meet June targets. Capital and goods and services improving disbursements under the Consolidated Fund for East Timor have

been very low in the first half of the year, but will increase as major contracts committed before October are realised. Revenue collection for FY 2000101 is on target in aggregate, but aspects such as user charges have lagged.

Cabinet and National Council increase Timorese ownersh ip...

A major step forward in Timorese ownership of the transifional and reconstruction processes has been made in the successful expansion of the Cabinet structure and the recent inauguration of the National Council. Overall, recruitment into the civil service is increasing (Annex D provides details).

However, less than 10% of management positions have been permanently filled. The management levels are of particular importance for the transition, because these are the civil servants ... but few senior who will hold the reins of administration after independence. This

positions have been top cadre of management must be in place, empowered and trained filled well before independence to ensure a smooth handover of

administrative responsibility.

Faster recruitment is essential ...

... as is transferring formal authori ty ...

. . . and resources

Sectoral strategies nzust support a stable transition

Agriculture and private sector growth are important for stability

Core government sectors must move from emergency to development

Strong financial nzanagelnent and a sustainable plan are needed

Accelerated management recruitment is thus a key pre-requisite to all components of the strategy presented in this paper, combined with a gradual reduction in international staff as independence approaches. Some international technical assistance is likely to be necessary after independence: an assessment of post-independence technical assistance needs will be completed before March 200 1.

The legal status and competencies of the structures and positions within the transitional administration will be addressed as a matter of priority. Together with faster execution of capital and goods and services budget allocations, this will ensure that Timorese civil servants have the authority and resources necessary to carry out their functions. Recruitment and transfer of legal authority will need to be complemented by strong and coordinated training and capacity-building initiatives.

Economic and social development is not specifically a transitional issue. Externally financed support for efforts in these areas will continue long after the transition to independence, and development project cycles are not dependent on the calendar for political transition. However, there are some strong linkages between economic, social and political developments.

For the economy, it is vital that agriculture and the private sector are experiencing strong growth at the time of the transition. There is a risk of a shock to labour demand in urban areas as international personnel withdraw, causing unemployment and consequent political instability. The sectoral strategies therefore include increased investment in agriculture and private sector development, attention to the regulatory framework and early consideration of the need for an employment safety net after independence.

For the core government sectors of defence and foreign relations, justice, law and order, education, health and infrastructure, it is important that the transition from emergency programmes to normal governmental service provision is completed before independence. Specific strategies have been developed to establish new defence and foreign relations capabilities. Key benchmarks for the other sectors focus on the achievement of acceptable basic levels for physical facilities and equipment, training of service delivery personnel, administrative systems and management capacity, together with studies on post-independence policy and financing options. Successful delivery in these sectors will be a strong symbol of successful nation building.

The transition to full independence needs to be supported by effective financial management systems and human resources, together with a sustainable financial plan. This is key to ensure that the new state generates sufficient resources to pay for the commitments undertaken during the transition and any new commitments necessary after independence. Key benchmarks for

Targeted assistance is sought

There are many challenges and risks

Faster recruitment will require resources.. .

... and measures to entrench good governance are key

Coordination amongst all the partners .. .

. . . can lead to a successful, stable and sustainable transition

fiscal sustainability include execution of the 2000-01 budget within the revised aggregates agreed; the collection of national accounts and household survey 'data to enable more accurate revenue projections for 2000-01 and beyond; and intensive training of Timorese staff.

The Brussels meeting is not a pledging meeting, since a large part of the funds pledged in Tokyo and Lisbon remain to be disbursed. Further external financing will need to be committed at the next donor meeting to support post-independence development plans. In the interim, targeted supplementary assistance will be sought from the international community to supper+ the transition strategy (Annex A).

There are many challenges and risks ahead in the implementation of this strategy. First and foremost is the ability to achieve recruitment targets, since, without identified Timorese managers and capacity- building efforts, the transfer of line management authority in a smooth and timely fashion cannot proceed. Increased resourcing of the recruitment process and close Cabinet attention to inonthly progress will be important to ensure that this activity stays on track.

Second, it is critical that the compressed timetable for administrative transition presented here does not result in a weak state or an administration open to corrupt practices. While the Timorese leadership is committed to transparent and accountable governance, there is no room for complacency. Corruption was widespread in the previous system and can easily reoccur in a context where job opportunities are scarce, government salaries are low and controls are still fragile. Strong capacity building efforts, the planned review of civil service incentives and the development of an anti-corruption strategy early in the year will assist in minimising this risk.

Last, close coordination amongst all the development partners will be vital, since timebound targets are tight and delays, gaps or duplication will carry a heavy penalty in a politically sensitive timetable. The National Planning and Development Agency has a key role to play in operationalising the strategy and monitoring targets, but success will require strong commitment from all civil service departments and managers. On the donor side, East Timor is a test case for aid coordination. The coming year provides a particular opportunity to consolidate progress to date and pull together behind a successful transition. Help is needed from all the development partners to ensure that the long-held aspirations of the Timorese people come to fruition in a smooth handover to a stable and sustainable independent East Timor.

1. Introduction

Donors outlined their expectations at Lisbon

This document has three purposes

The political timetable will be presented at Brussels

The focal point is the table of m ilestones

Annexes provide more detail

At Lisbon in June donors expressed their continued commitment to supporting the reconstruction and development needs of East Timor, and to providing budgetary support for the recurrent costs of government. They also outlined very clearly their expectations in several key areas such as improved performance reporting; accelerated project implementation; and greater emphasis on Timorisation of the public administration.

Aside from reporting on progress to date, the Brussels conference is key to maintaining international support for a Timorese transition strategy. The purpose of this document is to:

briefly review progress to date, with particular emphasis on issues emerging from the Lisbon Conference;

present an integrated strategy in support of the political transition process; and

discuss the risks to a successful transition.

The process of political transition is currently under intensive discussion between UNTAET and the Timorese leadership, and a broad public debate will be encouraged. The status of the discussions aiming to set the path to full independence will be presented at the Brussels meeting.

The success of the transition is underpinned by the success of reconstruction efforts in other areas of government responsibility. A well functioning public administration, sustainable public finances, good external relations, law and order, and strong public and private sector performance lay the basis for a smooth transition to independence.

This background paper has been written with the express purpose of facilitating discussions in Brussels, and its layout closely follows the conference agenda. The focal point of the paper is Table 1 on pages 3-4 which presents key milestones for a successful transition over the next twelve months in the key areas of government responsibility. The remainder of the paper provides more detail in each of these areas. This includes a brief recap on progress to date, an outline of the planned activities for 2001 and a discussion of the major challenges and risks to a successful transition. Annexes provide more detail on unfunded priorities, budget execution and budget revisions, performance reporting and Timorese recruitment.

Because of the tight focus of the paper on the key areas of government responsibility, the paper does not report extensively on the role and activities of each of the development partners individually. Broader development challenges and the role of East

Timor's development partners are discussed in the World Bank's Transitional Support Strategy and the UN Common Country Assessment. Both were completed recently and involved extensive stakeholder consultations. Addressing and financing these challenges post-independence is likely to be the focus of the next donor conference at which more data and analysis of options will be available.

Table 1: Key Benchmarks to Support a Successful Transition

Administrative Handover

I O~tlons DaDer to address

' 40'of eitrlnatis Customs and excise rates modified and in place Wages income tax in place Budget review completed and appropriations legislation approved by Cabinet and NC

Public Finmea,

. . . s~~pplylproct~re~ne~~t Issues Rev~ewlrev~sion of departmental orgalllgalns and recruitment process and crlterla Recru~t~nent process for all d~rectors-general and >35% of level 5-7 process ~ n ~ t ~ a t e d

coordination of overseas training opportunities decided Foreign Affairs Departln~nt staffed at 50% Organiga~ns and structures in place

Defence and Foreign Affain, Law and Order

250 tra~ned local pol~ce Pliase I of lnre~rorron I'lon co~npleted - I<e\mrtlure (4 ( '11~1'01, DIII, Baucau and Oecr~ss~ D~str~ct Col~rts, Dl11 and Ba~ccau Prosecut~on Offices and Becora Glen0 and Baucau Pr~sons fully

Budget spend~ng running at least I Select~on of personnel and

operational

I I I I Jan

>90% of level 1-4 recruited >90% of positio~is w ~ t l ~ statutorily establisl~ed ai~tl~ority held by East Ti~norese Reductro~~s ill i~iternational staff as per plans "65% of training days delivered agai~~st plan Capital and goods and services spending within 10% of CFA estimates Performalice management systeln introduced for 200 1-02 Options paper on alternative civil service structi~res and costs

Workshopv lo axree B~a i l ed intplernet~rarion slrarrgiev held m all seclorr

Tra~n~ng plans co~npleted >85% of d~rectors-general recru~ted.

2 a

2:

May

Y u

International TA in place I >90°/6 of training days delivered

against plan Training plans for 2002 by dept. Capitallgoods and services spending within 10% of CFA estilnates Accredilation system for profess~onal training courses and on the job experience developed

Aggregate budget spend~ng (wages and salar~es, goods and servlces and cap~tal) runnlng at

Leg~slat~or~ establ~sh~ng the defence force and ex-combatant relnsert~on framework ~ntroduced

order to meet revenue targets 2000-0 1 Final Budget Outcome prepared Reve~ii~e collection for Q3 and Q4 of 2000-0 1 within 80% of estimate Disbursemeut figures witliin 90% of estimates Monthly profiles of revenue collection (ie cash basis) prepared If Ti~norese counterparts not appointed in Marcli 200 1. review of the status regarding international TA

Total of 500 tra~ned local pollce Phase 2 of Itr~e~ralror~ I'latt executed I'rlcri I/rllo~c I'olrte

>65% of level 5-7 recruited, exception of school principals and chief nurses /.el Or~anica Ad~nin. Law. 1.c; do l,ie~t~urro 1'1rhlrca Poblic service act z30% capital budget and >40% goods and services budget d~sbursed by dept. Plan for systenis and data ha~~dover co~npleted Plans for inti TA tinalised Review of salary and grading scale co~npleted Anti-corruptio~~ strategy produced

Revenue collection for Q I 200 I - 02 within 90% of aggregate total Disbursement figures 90% of estimates First quarter budget update co~npleted (by end October) Macroeconomic forecasts for 200 I-02,2002-03 updated and ab~eed with IMF Revised set of tax rate options presented to Government, updated for national accounts and any distributional information

ldentificatio~~ and prioritisation of ~nternational instr~~nients to which East Timor shoi~ld accede

least 60% of estimates Third quarter update co~npleted by mid April Ti~norese col~nterparls in place for senior CFA positions, or agreement OII need for continuing i~~ten~ahonal TA ill line positions in CFA

One battalion recruited and trained Plans for exchange of diplomatic relations with key countries finalised Plans for me~nbersl~ip to the United Nations and lFls finalised

( 'ori~prehensive resiew (~fseolorol pIa11.v. ~tlclrrdrr~g progrc.s.r crgor~~sl 1arKel.c and r#rodi/ica~;or~.s r!frrrv~el.\ ~rr~rler/akcr~

Total of 1050 trained police. This includes some 400 ex-police thereby providing experience to the force

Foreign Affairs Department fi~lly staffed Inter-departmental and inter- service mechanis~ns in place to deal with continued border relationships with Indonesia and Australia

Total of 1.200 local trained police Phase 4 of the /rlleyralrorn I'larl: "Half wav "- rdenl~/;calion ~/'loca~totn.v,/or 221 vrlla.~!e pr~lrce prjsrs Ministry of Justice to be fi~lly staffed by East Ti~norese

1'o.vI.~ Public Defenders fi~lly staffed Suai Court operatio~~al Criminal registry introd~cced Notary service introdnccd

Total of 800 trained local police Phase 3 of the ltrregraliot~ 1'lut~:l:itouron ( I / ~-r//rf.~!r pos1.v lo r e r~ tu i t t~ t~~ dts1rtcl.v Co~npletio~~ of the Need.\ atla!vs;.v rrrrdy to guide developmc~~t of tlie I r i~c~ra l~on lJIut1 Law Reforth Co~n~nission establislicd

600 soldiers recruited Re~nsertio~~ programme fillly operational Fully functioning Departmelit of Foreign Affairs Proposal for foreign represe~itation brought forward in Budget context Continuatioa of intensive diplo~natic training for all staff

>90% of level 5-7 recruited 170% of positio~~s with statutorily establisl~ed autl~ority held by East Ti~norese Rednctions in inteniational staff as pcr plans 240% of training days delivered against plan 160% capital budget and >NO% goods and scrvices budget drsbursed by dept Agreed perfor~~~ance ~na~iagelnellt syste~ii i~itroduced for 200 1-02

Budget spcndi~ig at 90% of estilnate 2001-02 budget agreed with linancing requireme~~t identified Revenue estimates and five year financing reqnire~nent identified and ab~eed with lFls Plan to develop revellcle forecasting capacity. inclr~di~lg ~i~scroecono~nic forecasting capacity 0pt1011s OII tax rates and exemptions presented to Cabinet and NC (as part of Budget) in

Table 1: Key Benchmarks to Support a Successful Transition (cont.)

Health Selected essent~al drugs and ~ned~cal suppl~es to last 6 months Two rounds of Nat~o~ial lminun~sat~on days (pollo and V~tamln A) completed S~tes agreed and d e s ~ p underway for 25 pr~or~ty health centres Pollcy papers on health financing and role of the prlvate sector Nat~onal Centre for Health Educat~oll and Tra~n~ng (NCHET) operatlng 111 temporary slte

8

Education National vlslon and mlsslon statement publ~c~sed 300 schools at bas~c operat~onal level > 80% of books rece~ved d~str~buted 500 scliolarsh~ps underway Appl~cat~on procedures for new teachers publ~c~sed

AgriculturelEconomy R~ce and maim product1011 at 70% (120,000 MT) of 1997 levels Buffalo and cattle vacc~nat~on completed Hand-tool d~str~but~on benefiting 4,000 f a ~ n ~ l ~ e s co~npleted 5,000 hectares of ~ r r g a t o ~ ~ areas rccovered (lncludlng 45 co~tirndn~ty schemes) Min~stry of Agr~culture operat~onal and all staff recru~ted

Jan

2:

May

g

2

$

8

lnfrastruch~re Agreement with Educat~on 011 establ~shment of Dl11 Polyleclin~c 6 lnlnor Dl11 public b111ld111gs completed Power author~ty - lneterlng and b~llilig of large (3 pliase) co~n~nerc~al users ~n place Extens~ons completed on Dl11 Wharf Maxunu~n of 3 I vessels delayed at port

Workthop\ /o agree delarled rriiplcmen~a~ron \/ra/cgre\ held m all \ec/or\

D~str~ct agr~culture offices fully funct~onal (bulldlngs. staff. equ~pment, transport) 3-5 Pllot Agriculture Servlce Ce~itres establ~slied Quarantme regulat~ons and other standards for an~mal and plant prod~~cts ~ssued Jo~nt donors sectoral revlew New prlvate sector cred~t l~ne operat~onal Co~lilnerc~al legal framework adopted

Health admlnlstratton recruitment completed and l~ne autlior~ty hansferred More than 40% of health f a c ~ l ~ t ~ e s selected ~n d~str~ct health plans appropriately ut~l~sed 30% of ch~ldren under I ~m~nun~sed Hosp~tal needs and capaclty assesslnent completed Strategic plans for prevention and control of Malar~a. TB, STDs/tllV/AIDS and c~rc~~la ted Stakeholder consultat~ons on key pollcy optlons papers

600 schools at bas~c operat~onal level 1,000 scliolarsli~ps underway Un~vers~ty rehab~l~tated and re- opened, l~m~ted facult~es Input consulta~~c~es for pollcy and curr~cl~lum contracted Educat~onal adm~n~strat~ve processes defined

Paper on establlshlng all autonomous power author~ty due 28 Feb Metering and b~lllng for a furtl~er 1000 power custolners I Colnoro PS generating set overhauled Medluln to long tenn bus~lless plans drafted for Av~ai~on. Ports, Roads and Water Compl~ance wlth ~nteniat~onal safety standards for Dl11 and Baucau alrports Max~mu~n of 18 vessels delayed at port

( on~prehen\rve

Agr~colture pollcy optlons paper f i~~al~zed and c~rc~~lated 70 O h of c l~~cke~ i and plgs vaccl~iatcd B a s c l ~ ~ ~ e sllrveys and ~nventor~es co~npleted Agr~ctlll~lral cred~t programlne i~ndenvay 10 research and extenston staff trn~ned Dcc~s~oli on ~ieed for trans~t~onal safety net

Ch~cken and livestock restoratton proqamlne benefiting 27,000 fam~l~es completed Rel~ab~l~tat~on of major lrrlgatlon areas underway I00 percent of exported coffee cert~fied organlc T r a n s ~ t ~ o ~ ~ safety net des~gned (lf necessary)

R~ce alld lnaue product1011 at 80-120 perce~it of 1997 levels 5,000 hectares of small and major ~rr~gat~on areas recovered, Hydraul~c study and redes~gn for 5.000 lhectares of large lrrlgatlon schemes co~npleted 8 Pllot Ab~lculture Serv~ce Centres operat~onal Agriculture research programme operat~onal and masterplan lor ab~lculture colnpleted

rel'rew oi ,fecrorol plar~s. mclrrdrng progre\\

150 Health posts establ~slied with equlp~nent to prov~de bas~c prlmary liealtl~ care In accordance wltli D~str~ct liealtll care plans Evaluat~o~i of D~str~ct Health plan ~ ~ n p l e ~ n e n t a t ~ o ~ ~ Ongolng refresher and upgrade tralnlng of health workers at NCHET Des~gli of reg~onal hospitals cocnpleted I'ost-~ndependence pollcy optlolls paper final~sed and c~rculated Jo~nt donors revlew completed

More than 90% of health facil~t~es with less than 2 weeks of stock out of selected essent~al drugs over a three month per~od 90% of vlllages w11h11i 2 hours of a per~iianent source of heal111 care 60% of cli~ldren under I ~mmiln~sed Autono~nous Med~cal Store establ~sl~ed and operating

East Tl~norese lnanagelnent of Autononious Med~cal Store Central DHS functlonlng wlth m ~ n ~ ~ n a l external adv~sers Reg~onal Hosp~tals and further health centres under constructlon 25 Health centres co~~structed

agurn\r large/\ UII~I I P ~ I I ~ I ~ I L U I I O I ~ \ I/

Strateg~c pollcy opttolls paper co~npleted Release of Nat~onal Emergency Curr~culum for d~scuss~on 780 of schools at bas~c operat~onal level Mln~stry of Educat~on building rehabll~tated and equ~pped D~str~ct educat~onal offices operat~onal Tralnlng of personnel In educat~on ad~n~n~s t r a t~o~ i and management School mappllig study completed Jolnt donor revlew colnpleted School mapping exerclse final~sed School wnstructlon programme started Stakeholder consultat~o~is on pollcy optlons held In servlce teacher tralnlng programme deaglied

> 90% prlmary gross enrolment rate > 40% secondary/teclin~caI &TOSS

enrolment rate > 90% of schools recelved lnaterlals before start of school year Law on bas~c sclioollng and nat~onal educat~on system drafted Framework of cooperat~on between public and prlvate schools Teacher t r a ~ n ~ ~ i g programme commenced

/argel\ I I I I ~ ~ I fuken

Independent Power Aulllor~ty legally estnbl~slied fro111 I July Plan for r~~ra l power statlon rel~ab~l~tat~on final~sed F~nal bus~~less plans for Av~at~on, Ports, Roads and Water. appropriate to budget constraints ol an ~l~depende~~t East T ~ ~ n o r I1 Commul~~ty lnanagelnent arrallgelnents operatllig sat~stactoi~l) for wallsan Max~mu~n of 7 vesselr delayed at Port Jol~it dolicas revlew colnpleted

2 Colnoro PS generallng rets overliat~led Plan for rural power statlolls ~inplemented 26 towlls with ptped water supply 26 Comln~ln~ty n i a~~age~ i~e~ i t arrangelnelits formal~sed and operatlllg sat~sfactor~ly Complet~on of 3 d~mr~ct works depots Maxllnuln of4 vessels delayed at Port

Colnpletlon of 3 dlstrlct offices 26 towns wltli p~ped watel supply 52 Communcty llianagelnelit arrangements tor water and saliltatloll forlnal~sed and operating

satisfactor~lv Bulld~llg regi~lat~ons ~n place Gover~~ment account payment and Glro banh~ng fac~lit~es establ~sl~ed througli the Post Office Max~~nrn~~n of 2 vessels delayed at port

2. Political Transition

To support political transition. ..

. .. increasedpower sharing has been established ...

... through representative bodies

Timorisation and capacity building are critical

The Transitional Administration and its partners are now well into the second phase of a three-phase process of political transition which will culminate, at independence, in full East Timorese political authority.

During the first phase, which coincided with the provision of emergency assistance and essential services, full executive and legislative authority was exercised by UNTAET. This was done in close consultation with an appointed National Consultative Council, representing the major political players then on the scene.

In order to increase Timorese participation in the Administration, and to move closer to East Timorese political authority, the second, power-sharing, phase of political transition began in July, with the appointment of a joint Cabinet. The Cabinet is comprised of five East Timorese and four international staff. Under the overall authority of the Transitional Administrator, Cabinet exercises executive authority for the Transitional Administration, and has to date considered a number of fundamental policy issues, such as the nature of the taxation system, a review of the budget, a new criminal procedure code and access to higher education. Collectively, the Cabinet sets government policy and endorses government-developed legislation. Each Cabinet member also acts as the head of their line departments.

In October 2000, the National Council commenced its role as the first ever all-East Timorese legislative assembly. This Council is an interim 'step towards a democratic institution as the 36-members were appointed rather than elected. Members were chosen to represent the districts, the major political parties, both inside of the CNRT and out, and a broad cross-section of civil society. The National Council reviews legislation produced by the government, and can produce its own legislation for consideration by Cabinet.

The current phase of political transition represents a significant step forward in terms of putting executive and legislative power into the hands of the East Timorese. Capacity building and Timorisation of the administration remain priorities in all aspects of UNTAET's activity, and the development of an indigenous capacity in electoral operations, legislative functioning and executive procedures will be a key objective of political transition.

An update will be in Brussels

Exact dates have yet to be determined

Next steps can be addressed now including.. .

. . . voter registration ...

..civic education ...

. . . and a government electoral office

The next step in implementing the Transitional Administration's mandate for the political transfer of responsibility is to manage the transition from unelected government institutions to elected bodies. Discussions have now begun on the benchmarks and timetable for the final phase, leading to independence. An up-to-date account of the current status of these discussions will be presented at the Brussels Meeting.

All parties are in agreement that the defining characteristics of East Timor's future governnient, including its Constitution and its constitutional structures will be determined by the East Timorese people. The role of the Transitional Administration in the period leading to independence will be to support the leaders and the people of East Timor in the election of a constituent assembly and the drafting of the Constitution of the new country.

The Transitional Administration and the East Timorese leadership have expressed their desire to see the elections take place in 2001. However, the exact date and the precise nature of these elections, as well as the eventual move to full independence, are yet to be decided. These issues will also need to be discussed with the Secretary General of the United Nations and the Security Clouncil.

While the exact shape of the future political and constitutional structures are not yet fully determined, there are certain necessary steps in the political transition for which the Tr.ansitiona1 Administration and its development partners can prepare.

In the first quarter of next year, the process of voter registration must be commenced. The Cabinet and the National Council, as the existing political entities, will need to approve an electora.1 law and decide on the appropriate electoral system for the clonstituent assembly. Prior to the establishment of this constituent assembly, it will be important for the Transitional Administration to support East Timorese civil society in facilitating a broad public (debate on the Constitution.

At the same time, the Transitional Administration and its East Timorese partners - with the support of the donor community - will embark on civic education and voter education programmes with the participation of civil society. The Administration will need to take steps to establish a government electoral office, to help coordinate and support the first elections and be an important administrative structure for future elections.

These activities are prerequisites to the establishment of a stable transition towards independence for East Timor. It is incumbent on the Transitional Administration to ensure that these steps are taken in a manner that both reflects the desires and goals of the people of

East Timor and fulfils the Security Council's mandate. The support of all development partners is needed to undertake these endeavours effectively. This support must also extend beyond assistance to just the constituent elements of the political transition in the more narrow sense. The transition to full independence will not succeed and will not be sustainable unless an effective administrative

A conzpr.e/zensive handover and stable security and development environment are in

stratesy supports place. the political t14ansition The remainder of this paper focuses on the key benchmarks to

achieve a comprehensive and integrated strategy to support the transition through assistance to:

establish an effective East Timorese administration;

develop civil and social services;

rehabilitate infrastructure and basic services following last year's violence; and

establish the conditions for sustainable development.

3. Administrative Handover

Trai'ls fc1.1 power to Tiinorese

A critical part of UNTAET's inandate in preparing for the ' i ~ g independence of East Timor is the establishment of a functioning

administration and the transfer of administrative power to Timorese hands hands.

is a core part of the inundate ... Progress has been made after the Lisbon meeting, with the

recruitment of 5,776 civil servants, including 4,740 teachers. An additional 2,152 civil servants, including approximately 800 health workers, are still on temporary contracts. Most core governmei~t functions are now operational, but the degree of participation of Timorese staff vari .s.

. . . but inatzagemeizt ~*c.cruiltneizt has lugged

Whilst recruitment of service delivery workers has proceeded rapidly, lags have been experienced in the recruitment of the more senior civil servants (see Annex D). This is due both to insufficient capacity in government recruitment functions, and to difficulties in attracting qualified candidates at the East Timor Transitional Administration (ETTA) wage scale in the face of stiff competition froin agencies, donor missions and NGOs.

The management levels are of particular concern for the transition, because these are the civil servants who will hold the reins of administration after independence. Whilst recruitment and training of professional and support staff will likely continue long after the transition, this top cadre of management must be in place, empowered and trained well before independence to ensure a smooth handover of administrative responsibility.

Key benchmarks require an acceleration of recruitment .. .

. . . and measures to address the supply of candidates

Plans for international TA are needed ...

. . . internationals will become advisers

Legal authority will be deJined and then transferred

The key benchmarks for administrative handover presented in Table 1 show an accelerated recruitment of Timorese management staff (level 5-7 in the personnel scale), combined with a gradual reduction in international staff as independence approaches. The strategy is to first recruit the Directors-General (heads of government agencies), who will then help direct subsequent recruitment and capacity-building. In order to increase supply of candidates for senior positions: (i) recruitment criteria and process will be reviewed in December to ensure that strong weight is given to practical and professional experience; (ii) a review of wages and grades will be completed by March to ensure that incentives are sufficient to attract good candidates, within a sustainable recurrent financing framework.

To support this accelerated recruitment process, each department will finalise its organigram and recruitment plan by the end of December, after debate in the National Council. The plans will include measures designed to strengthen the representation of women amongst both the candidate and successful applicants. These measures will be strengthened by service-wide proposals to promote the role of women in the civil service

A plan identifying the needs for international technical assistance up to and after the transition will also be produced by the end of March. In general, once Timorese appointments are made, the counterpart international staff member will become an adviser for a set period for capacity building purposes. Early identification of a technical assistance plan should ensure that those ETTA international staff who will remain right until the end of the transition as valued technical advisers have contract security, and will also permit early identification and costing of post- independence technical assistance needs. A skills analysis of international staff should be considered to ensure that the right staff are deployed in the right posts to optimise skills transfer.

In addition to accelerated recruitment, it is also important that Timorese civil servants have the authority and resources to carry out their new responsibilities. UNTAET has drafted an umbrella regulation on the powers and authority of the East Timor Transitional Administration which will be debated in late November. This will be followed by an administrative law defining the structures, staffing, functions and competency of each ministry before the end of March. Key positions of statutory authority (inter alia, to sign legally binding agreements, hiring and firing of staff, expenditure authority) will be identified within this legal framework. The transfer of powers to Timorese staff in these key functions is a key measure of the transfer of genuine administrative authority and will be separately monitored.

To ensure that resources are provided to the new Timorese civil servants in a timely manner, targets have been set for disbursement

Empowerment requires resources

Considera b le capacity- building has taken place

There have been constraints, which need to be addressed

The NPDA will coordinate capacity-building

A plan for the transfer of data and systems

Risks include ...

of goods and services and capital budget by department. These targets provide a proxy to ensure that new Timorese recruits have adequate office facilities, furniture and equipment, transport and operating expenses to carry out their functions.

A large number of capacity-building initiatives have started in recent months. 1,223 participants have attended courses run by the Civil Service Academy. These include basic induction and management training, local government training, district administrator orientation, computer training and language courses. Further capacity building has been provided though a wide range of externally-supported training programmes, including diplomatic training, public governance and policy, environmental protection, records keeping, infrastructure support, health sector managers, district accountant's, infrastructure managers and engineers and to over 5,000 members of local development councils.

Key constraints to optimising benefits from capacity-building efforts over the past period include: (i) lack of an overarching plan to coordinate capacity building initiatives; (ii) slow recruitment, and hence inability to complete a full training needs analysis or start capacity building for the management levels; (iii) language constraints which mitigate against on-the-job transfer of skills from international staff.

The appointment of the head of the National Planning and Development Agency (NPDA), with overall responsibility for capacity-building, will assist in coordinating efforts. Plans should also be demand-driven from the departments, who best understand their own training needs. The NPDA will therefore coordinate the production of preliminary training plans by departments before the end of March 200 1. Particular emphasis will be given to combined classroom and on-the-job training, to appropriate language skills for international consultants and trainers, and to recruitment of more Timorese trainers. Supplementary language courses and strengthened interpretation services are also critical to ensure effective skills transfer between international and national staff.

Finally, a plan will be produced by March on the handover of manual and computerised administrative systems and data to Timorese management. Although the current administration does not have many complex data systems, it is important that knowledge of administrative data and archives, and skills in managing admi~lstrative systems are transferred well in advance of the transition to independence.

Several risks will be faced in the implementation of the plan for administrative transition. Firstly, the recruitment unit does not currently have sufficient resources to process recruitment against these targets: many departments also do not have sufficient Timorese managers to generate and verify job descriptions.

. . . resources in the recruitment unit ...

... the supply of qualified candidates.. .

... the possible reemergence of corruption.. .

... and a high turnover rate

Accelerated recruitment will require a short-term injection of additional national and international expertise. Building the new East Timor administration is a one-off project which will require much greater recruitment expertise than will be needed on an on- going basis, and is a key part of UNTAET's mandate. Skilled personnel covered under the assessed contribution budget could be redeployed for this purpose, and ETTA will seek additional short- term external assistance to achieve the recruitment targets.

Secondly, supply of qualified candidates for senior positions may not be sufficient in all sectors. This will be addressed through three actions: (i) the review of wages and grading described above; (ii) efforts to agree on a framework for professional wages with the UNTAET mission, UN agencies, diplomatic missions and international financial institutions, in order to decrease distortion of the skilled labour market; (iii) quarterly updating of the plan for international technical assistance produced at the beginning of the year to reflect positions where a strong recruitment effort has not succeeded in identifying appropriate national candidates. The period of handover of line management responsibilities from international to Timorese staff will be prolonged where Timorese candidates require a longer period of apprenticeship.

Thirdly, the rapid build-up of the administration creates a risk of weak state capacity and the reemergence of corruption. Timorese leadership at all levels are committed to maintaining clean government, but there is no room for complacency: corruption was widespread in the previous system, and can easily reoccur in a situation where job opportunities are scarce, government salaries are low and controls are still fragile.

The capacity building initiatives outlined above will strengthen institutions and skills. To address corruption, the Department of Internal Administration will coordinate the development of an anti- corruption strategy before the end of March 2001. This is likely to be followed with more detailed interventions on legal sanctions, simplification of procedures, increased transparency in budgeting and expenditure, improvement in procurement processes and public education. To guard against bias in the recruitment process, the Civil Service Commission will retain oversight, and the Office of the Inspector General will carry out routine spot checks to identify irregularities. Increased capacity in the recruitment unit should include resources to carry out widespread national information campaigns to enhance transparency.

Fourthly, the high level of training planned for the civil service may result in a high turnover rate, where trained civil servants; depart for jobs with higher remuneration elsewhere. The actions on relative pay and incentives described above will assist in addressing this risk. It should also be noted that, provided these people do not leave the country following training, the application of skills gained

in the civil service to the private sector still retains a net economic benefit for the country.

4. Defence, Foreign Relations, Law and Order

The external environment is a critical determinant of PKF presence

East Timor's external relations in the region and more broadly will be critical to a stable transition. An elected government, rather than the Transitional Administration will undertake most of this work. However, there are a number of preparatory steps that should be undertaken prior to independence to allow a more seamless transition.

The external environment has already become a critical determinant of the pace at which the PKF is withdrawn, and will probably continue to be so. Earlier plans for a phased withdrawal of the force have been modified following the deterioration in the security environment in both West and East Timor in July-September this year. The CNRT and Falintil are both open to the idea of retaining a UN peacekeeping presence after independence, although clearly such a proposal would be subject to the agreement of the government of an independent East Timor and the UN Security Council. UNTAET is aware of the need to factor the likely post- independence security threat into its planning.

The preferred In June a team from the Centre for Defence Studies at King's option is a 1,500 College was asked to coordinate an independent study on security standing army and force options for East Timor. This study proposed three options for 1,500 ~.eserves a defence force. The third option involving a 1,500 person standing

army and a 1,500 person reserve force was endorsed by CNRT and ETTA.

Provision in the In the Budget Review, provision was made for the recruitment and Budget for the first training of the first 600 soldiers. The East Timor Defence Force 600 soldiers donors' conference is to be held from 21-23 November. This

conference has been scheduled to discuss the development of the East Timor Defence Force and to assist potential donors in identifying appropriate contributions to the defence force.

A framework for the return of ex-Falintil soldiers into civilian life has also been prepared. This provides for transitional safety net packages for ex-combatants, together with longer term support for

Establishing the income generating activities. role of the defence force in law The next step is the legal establishment of the defence force.

Legislation to this effect is currently being developed and will be brought forward for discussion shortly. It will include clear

principles such as the subordination of the defence force to civil authority, and clear and transparent guidelines for eligibility of ex- combatants under the reinsertion programme. The second step is the actual recruitment and training of the first 600 soldiers. The target is to have this battalion of 600 soldiers recruited and fully trained by the end of 2001.

Diplomatic The Transitional Administration is neither able to enter into relations are left diplomatic relations on behalf of a future independent East Timor, to an independent nor would this be appropriate. However, preparatory work call be East Timor undertaken to ensure 'that East Timor can enter into diplomatic

relations with other countries on or immediately after independence.

The first formal step in this direction was made in October with the

Only preliminary appointment of the Cabinet Member for Foreign Affairs. The next

steps are possible step was the creation of an embryonic Department of Foreign Affairs and the funding of that department following the Budget Review.

Ongoing issues include .. .

... relations with Indonesia.. .

... and talks with Australia over the Timor Sea

There are four challenges. ..

Major ongoing issues are relations with Indonesia and Australia. Despite the challenges presented by the security threat emanating from West Timor, relations with Indonesia continue to develop through regular contacts between UNTAET and the Government of Indonesia at all levels. Of particular importance was the agreement reached on 14 September between UNTAET and the Government of Indonesia to establish a Joint Border Committee which provides a framework in which all issues of a cross-border nature call be readily dealt with. The first meeting of the Joint Border Committee will take place in late November.

Security and refugee problems remain the key outstanding issues in bilateral relations. Efforts will continue to seek a resolution to other unresolved issues such as the payment of pensions of former Indonesian civil servants who wish to live in East Timor, bank deposits, border trade and the need to establish a land corridor between the enclave of Oecussi and the rest of East Timor.

Talks with Australia continue on the nature of a regime to govern the use of petroleum resources in the Timor Sea. These resources have the potential to be East Timor's most significant source of income in the medium to long term. The first formal round of talks took place in Dili on 9-12 October. Informal discussions have subsequently been held to ensure that every effort is made to have a framework regime in place by independence.

There are four major challenges in these areas over the course of the next twelve months. The first, in defence, is to ensure a smooth transition from a liberation army to a small professional force. Full financing of the capital and training needs of the defence force by donor countries will be critical to build a professional culture. It is also important that the defence force formation and reinsertion

. .. transforming a g ~ e / ~ i l l a force into a regular army. ..

. . . building a dblomatic corps.. .

... determining the treaties East Timor should sign.. .

...fu nding these areas within a tight budget

Citpol has two objectives

Security is being provided.. .

. . . and Timorese cadets are being trained

calendar run in parallel. This will ensure that those ex-combatants not joining the new force receive economic support commensurate with the respect due to them for previous service, and sufficient to ensure a smooth transition into civilian life.

The second is to build a functioning department with a corps of highly trained civil servants capable of representing East Timor overseas. This will require building on the training that has already been provided to a group of fifty trainee diplomats.

A third challenge involves the identification of international treaties and agreements that East Timor should accede to on independence. This will require considerable preparatory work, including evaluating both the benefits and obligations associated with each treaty. Preparatory work will also be required to ensure that East Timor is ready to exchange diplomatic relations and to seek membership of inter alia the UN, the IMF, the World Bank and the ADB upon independence.

The final challenge - the cost of defence and foreign representation - is common to the Defence Force and the Department of Foreign Affairs. Foreign representation and Defence are critical in defining an independent nation. However both are major sources of spending pressure. The cost of foreign representation in first world capitals is no less expensive for a small developing country.

The plan for foreign representation and for the expansion of the defence force above its initial level will need to be considered in the 2001-02 budget context. Addressing these very legitimate needs of a sovereign nation within a tight fiscal environment will be a major challenge; not only in 2001 -02 but also into future years.

The creation of a functioning internal security and justice system is a critical component of an independent East Timor. The mandate given to the Civilian Police (Civpol) Commissioner was made up of two objectives:

to provide security and restore law and order

to develop the Timor Lorosae Police Service and establish the Timor Lorosae Police Academy.

The first objective is being met with the deployment of approximately 1,300 international Civpol staff in the 13 Districts within East Timor. The second objective is also underway with the establishment of the Timor Lorosae Police Academy in March 2000. The first class of 50 cadets graduated in July and two additional classes have graduated, leading to the placement of 147 police cadets in the field.

In addition, during the Budget Review, additional funds were allocated to accelerate the training of police. This funding provided for the training of 400 ex-police officers over a month, rather than the three months for new cadets.

Civpol has Civpol has developed a comprehensive plan to introduce commenced its community policing and phase out its own presence. The first four transition plan ... phases of this plan are designed to be implemented by December

2001. Briefly the phases involve the following.

Establish Civpol district headquarters and substations.

... community policing is the inode1

The justice system has four components

Identify and introduce three village level police posts in three districts (a total of nine posts). The posts will serve as pilots to allow evaluation and improvement before phase three.

Based on the results of the pilot programme, three village police posts will be introduced in each of the remaining ten districts

It is planned to have 221 village police posts opened by December 2001.

The final phase of the project involves expanding village level policing to all villages.

The establishment of a hnctioning judicial system is one of the major objectives of the UNTAET mission in East Timor. The four central elements of the justice system are the court system, the prison service, the prosecution service and the public defenders service.

Reconstruction is Four district courts have been established Dili, Baucau, Oecussi and

continuing Suai. A National Court of Appeal has also been established. These courts are staffed by 25 judges, 13 prosecutors and nine public defenders. Over the next twelve months there is a need to continue with physical reconstruction, including rehabilitating the Suai District Court Building.

Prison capacity Two prisons are in operation. The Becora prison has capacity for

is increasing 175 prisoners and currently houses 109. The Gleno prison has capacity for 70 prisoners and currently has 57. The Baucau prison with capacity for 30 will be opened in late November. In addition, the security at Becora will be upgraded. A separate ward for juveniles will be created at Becora, and a separate ward for women prisoners at Gleno.

Judicial Affairs will also be introducing a number of key pieces of

Key pieces of the the legal framework over the course of the year. This includes establishing a notary service, developing a criminal registry and

legalframework establishing a Law Reform Commission. will be developed

A Truth and Reconciliation Commission is hoped to be established A Truth and in the near future. The Commission is expected to have a truth Reconciliation telling component and commissioners who will hear cases of minor Commission is crimes and can impose non-custodial sentences, such as community envisaged service. Crimes against humanity and war crimes will be dealt with

in the judicial system.

There are a number of risks to achieving a successful transition in The risks to police both the policing and justice systems. Like other sectors, both will and justice need to use scarce resources effectively to deliver programmes.

involve.. . And like all sectors they will need to focus attention on building the human resource base, and the capacity of their new recruits. This will require both time and resources.

In the case of-the police, care will need to be taken to identify ... seamless and address any reduction in policing standards during the transfer of

. - phasing down of the Civpol presence. responsibili ty ...

Similarly, the transfer of responsibility for prison guarding will need to ensure that a high standard of service is maintained.

... a focus on training ...

. . . and judicial salaries

A continued commitment to training for judges, prosecutors and public defenders needs to be a priority if this sector is to succeed.

There are additional risks and pressures in the justice system. There is pressure on wages which will be considered in detail in the new year. A possible solution is the creation of a separate salary scale for the judiciary.

The capacity of the prison system is also an issue. There may be pressure to expand the capacity of the prison system, with associated capital and recurrent costs.

5. Economic and sectoral sustainability

Over the next twelve months sectoral activity in East Timor must Moving from move from an emergency basis to a sustainable development basis. emergency to This will require a change in emphasis and a greater focus on the development appropriate level of service to be provided in the medium term.

East Timor is experiencing an on-going strong revival of economic activity, led by growth in construction, commerce and trade, and

There is a revival basic services. (A more detailed assessment of this issue is in private sector presented in a joint IMFIWorld Bank paper available separately). activi ty ... This revival is largely driven by the demand created by the UN and

expatriate presence, which has stimulated some private investment. However, there is little evidence of permanent businesses being established.

Private sector representatives have expressed their preference for engaging in activities in which investments are recovered in the

... but not in long term investments

An appropriate framework needs to be created ...

. . . including corporate and investment law .. .

shortest possible period. This is due to political uncertainty and lack of an appropriate regulatory framework.

The creation of an enabling environment for private sector activity does more than complement the establishment of an efficient public administration. The absence of a successful private sector will not only lead to political and social pressures. It will also lead to an inability to raise the revenues to finance possible solutions.

Some progress has been made in establishing an appropriate legal framework for private sector activity. Since June, new regulations have been drafted and are subject to a consultation process. These include a Foreign Investment Code and amendments to the Indonesian Law on Companies. A policy paper on insurance law has also been circtllated. Much work remains to be done to ensure that a viable framework is in place to enable more sustainable private sector recovery before the transition. This includes a commercial legal framework, land and property rights law, labour code, and mechanisms for the resolution and arbitration o-f disputes. In addition, a number of supply and demand-side initiatives are planned during 2001 to smooth the risk of economic shock during the transition. These include:

Supply of credit to small, medium and micro-enterprises; ... and a number of supply and Support to district business development centres and technology

demand measures resource centres;

will help Assessment of the need for renewed transitional employment programmes to cushion the reduction in labour demand caused by the withdrawal of international staff.

Agriculture is the primary sector in the economy

Agriculture remains the primary source of income and employment for the Timorese population. Production was severely disrupted in 1999. As a measure of this, domestic production of milled rice and maize is projected to reach only 120,000 metric tonnes (MT) in 2000, approximately 70% of pre-conflict levels. This shortfall is attributed to:

a reduction in the area planted due to the displacement of over 100,000 refugees and dislocation of labour in rural villages;

the destruction of irrigation schemes for rice production;

loss of government services; and

loss of services from private sector suppliers.

The initialfocus is The initial focus in agriculture is to restore agricultural production

to restore to its pre-ballot levels, after which attention must turn to bringing production more land under cultivation and increasing yields.

A number of programmes have been introduced and will be continued over the next twelve months. These include restitution of

A nunzber of programmes have been started

Production will depend on inputs, including labour

The focus needs to move to the longer term

Irrigation repairs underpin productivity increases

Fisheries need to move from self- sufficiency to income generation

Coffee is the key export earning sector

priority farming household assets, vaccination of livestock, rehabilitation of irrigation systems, fertiliser demonstrations and pilot fisheries rehabilitation. Progress in livestock vaccination and community rehabilitation of irrigation systems has proceeded at a satisfactory pace. There have been lags in the restitution of assets to farming households due to difficulties in beneficiary selection, and the speed of major irrigation rehabilitation works remains a concern.

As a tangible measure, the target for rice and maize production in December 2001 is 80-120% of 1997 levels. Achieving the upper range will be dependent on increasing the labour supply through the return of refugees from West Timor and timely implementation of planned projects.

Moving from emergency rehabilitation to a longer term goal of higher agricultural productivity and greater food security requires a focus on longer term planning. By the middle of the year a policy options paper and a sectoral development plan will be finalised. This work will be supported by the collection of agricultural statistics, including landuse and fisheries data.

Productivity increases next year in rice will depend on the rehabilitation of irrigation works which experienced more serious damage during the crisis. Feasibility design studies conducted in the first part of the year should enable work to start before the rainy season. In addition, a new programme of agricultural credit and agricultural service centres will increase supply of inputs and marketing services.

In the area of fisheries, draft strategic guidelines for the orderly rehabilitation and development of the aquaculture and seafood industries have been developed. Subsistence fishing is slowly recovering through joint NGO / UN programmes. The next step is to examine the opportunities for real income generation through commercial activity. Moving in this direction will require research into offshore resources, training of industry personnel and the development of seafood-marketing networks.

Deforestation and associated erosion and severe soil degradation due to unsustainable land management and land-clearing for agriculture and fuelwood is the major environmental problem facing East Timor. To address this a forest inventory is planned which will support further analysis and the costing of other interventions.

Coffee has been a major export earner, and there is considerable potential for further development in this area. As a first step, all the coffee growing areas (1 9 sub-districts) have been declared organic zones. There is strong: potential to develop a range of agro-forestry

products within these areas to provide diversified crops for poor farmers.

Education is the way to build human capital.. .

. . . and is an important symbol of nation building

There has been considerable progress.. .

and constraints have been addressed

The tertiary sector is re-opening ...

. . .future options need consideration

The education system now moves into development phase

The education sector is one of the most critical for East Timor's transition to an independent state. Strong investment in education is the only way to provide the human capital needed for growth and development in the long-term. . Education is also important for nation-building in a wider sense, providing the means to inculcate new values of democracy, tolerance and accountability in the generation who will grow up after independence. Quick revitalisation of the education system is important as a symbol of national identity as the transition approaches.

The first phase of projects in the education sector focussed on getting schools up and running at a basic operational level before the end of January 2001. A multidonor mission on education is currently in the field to support the education department in evaluating progress and orienting the next phase. 800 classrooms have been reroofed, and more comprehensive rehabilitation work has started on 600 classrooms. 4,740 teachers have been recruited. Over 1.3 million textbooks have been received and 600,000 distributed. These include new textbooks in Bahasa Indonesia, with edited content, new covers and prefaces specially designed for East Timor, together with first/second grade and language manuals in Portuguese. These activities have been supported by bilateral donors, the TFET, UN agencies, the peacekeeping forces and NGOs.

School rehabilitation activities were behind schedule in July- October, due to management, procurement and logistics problems. Roofing materials, which experienced shipping difficulties, are now all in country. A decision was also made in late October to enable community procurement of some materials, which has enabled rehabilitation to move ahead at a much faster pace. It is estimated that at least 90% of the basic operational level rehabilitation targets for the current financial year will be realised.

In the tertiary sector, a decision was made by Cabinet to reopen the university, with 4,500 students to be enrolled in degree programmes and 3,000 in bridging courses from January onwards. Scholarships have been provided to around 500 students to start or resume degree courses abroad. A more structured study of tertiary and other post- secondary education options will be necessary over the coming months, to address financial sustainability, appropriate quality standards and trade-offs between primary, secondary and tertiary sectors.

The next twelve months will see the transition from an emergency revitalisation operation to the building of a new national education system. A national vision for education will be publicised in December. As emergency rehabilitation works are completed, the

Policy support initiatives are planned

Physical reconstruction will continue

The nzajor risks are management.. .

. . . and coordination in the sector

Health has a sector-wide approach

emphasis will gradually shift from physical infrastructure to education management and the quality of teaching. The education department plans to finalise recruitment of Timorese national and district managers by the end of March, and train them in educational and administrative management by the end of June. A new initiative for teacher training will also be launched, with the aim of training over 4,000 teachers before the start of the 2001-02 school year.

To create a solid platform for continued improvemei~t in the educational system after independence, a number of policy support initiatives are also planned during 2001. By the end of March, a variety of input studies will be commissioned by the Department of Education to evaluate policy options. The aim is to release a strategic policy 'options paper for discussion in June, with stakeholder consultations between July and September. A new legal framework for the national education system would be drafted before the end of 2001, including the framework for cooperation between public and private schools.

Increased emphasis on the quality of the education system does not mean that work on physical facilities will stop. The completion of a school mapping exercise will allow good decisions to be made on the location of future schools. These locations may differ considerably from the previous system, due both to population movements and opportunities to eradicate inefficiencies. The new school building programme will involve the demolition of some structurally unsound schools and their replacement with new model schools, which will be piloted before the end of June 2001. It will also include upgrading of schools rehabilitated in 2000-01 with water and sanitation facilities.

There are two major risks to be managed in the education sector. The first involves managing the desire to maintain rapid service delivery targets with the need to reform the previous education system. This will require careful management over the next year to sequence activities in the education department, such that policy development discussions are scheduled to accommodate pressures on managers around the start of school terms. In addition, coordination amongst government, bilateral and multilateral agencies and NGOs will need to be strengthened to avoid duplication or gaps in a sector, which has many diverse stakeholders.

In health, a sector wide approach is being taken to the Health Sector Rehabilitation and Development Programme. Donors have agreed to coordinate their assistance to the sector, and to fund only those activities agreed with the Division of Health Services (DHS) to be essential and sustainable elements of the health programme. The major part of the funding is channelled through TFET, CFET and humanitarian support to NGOs. Additional assistance is also

provided from bilateral sources and technical support from UN agencies has accelerated progress in the sector.

Restoring access and developing systems are key

Post- independence options will be prepared

A Central Medical Store will keep health centres stocked

However there are serious challenges .. .

. . . managing the move from bilateral to DHS funding

The Division of Health Services started with a strong base in the East Timor Health Professionals Working Group workshop, which defined important principles of the health system. DI-IS has worked to plan and implement the two main axes of the programme: restoring access to basic services as quickly as possible, and beginning the process of policy and systems development. Specific achievements in the sector have included:

implementation of district health plans in 12 districts, involving the operation of 63 community health centres, 85 health posts and 1 16 mobile clinics;

repair and rehabilitation of 50 facilities and the design of 25 health centres;

reestablishment of the national TB programme and a national polio immunisation and vitamin A distribution day covering 80% of children in its first round; and

progressive establishment of key supporting systems including pharmaceuticals, epidemiological surveillance and laboratory testing.

The coming year should see the production of post-independence policy option papers and a strategic plan for the prevention and control of Malaria, TB, and STDsIHIV as well as substantial progress in the development of health policy options and the development of a framework for a sustainable health sector.

Construction of a Central Medical Store and the establishment of an autonomous management system for the supply and distribution of drugs (including a substantial programme of training for East Timorese to take over the management of the system) will be in place first half of calendar year 2001. Substantial progress in the rehabilitation of 25 priority health centres will have been achieved in 2001 together with the re-equipment of 150 health posts in accordance with district health plans.

Despite this progress, serious challenges remain, which relate mainly to the need to sustain a systems approach to health policy development, and avoid the pitfalls of piece-meal decision-making. There is also a range of other challenges.

Careful preparation and capacity building will be needed as responsibilities move progressively from bilateral assistance and NGOs to the DHS. A mission currently in the field is considering the need for future funding of NGOs under the TFET and how best to ensure uninterrupted health services as NGO support moves from an "emergency" to a "developmental" approach which is sustainable.

. . . assessing hospital needs ..

. . . managing multiple stake- holders

Infrastructure has delivered essential services.. .

. .. but there have been problems with cost over- runs and cost recove;.y

Infrastructure must determine a Jscally sustainable service level ...

Slow recruitment of health workers and managers has led to delays in training and capacity building, putting at risk improved service delivery and more rapid adoption of responsibility by the East Timorese.

Assessment and planning of needed hospital capacity within the likely resource envelope is scheduled for 2001. Since there are strong indications that the current capacity is inequitably distributed and will not be sustainable in some areas, this is likely to be a politically sensitive issue.

Reaching out to all the major stakeholders in health - from the political leadership to the community level as a mechanism to increase ownership and to deliver health programmes. A particular need is to strengthen the processes by which NGO service providers are involved in full partnership with the DHS.

In infrastructure the move from emergency rehabilitation to sustainable operation will be critical. There have been remarkable achievements in this sector considering the extent of the damage during the post-ballot destruction.

The Dili airport and port are both operational.

Power is provided on a 24 hour basis to Dili and Baucau and on a six hour basis in other regions, although there have been considerable outages recently due to capacity limitations.

Piped water has been made available to at least one centre in each district.

Progress on backlog road maintenance and recovery of landslides was initially slower than expected during the dry season, but has picked up pace in the last two months. A joint plan with the PKF to maintain arterial road access through all the main arteries in the rainy season is expected to meet military requirements and avoid major population centres being.cut off.

These services have been supported by a number of funding sources including the CFET, the TFET and bilateral donors.

The successes in restoring basic services in essential areas need to be balanced against problems with cost overruns and low levels of cost recovery. In particular, the power authority required significant extra funding as part of the Budget Review. This is in part due to higher world oil prices, and in part due to unchecked growth in demand. in addition delays in installing meters mean that user fees will not be collected. Delays in metering also contribute to the higher demand, as users have no financial incentive to reduce consumption.

Infrastructure faces two major challenges over the next twelve months. The sustainable level of service delivery needs to be determined taking into account fiscal capacity, and the

... there can be major problems with over- capitaiisation ...

... and there is pre- existing capital that may not be restored

Drafl business plans will assist agencies

Options for moving ofS-budget need to be explored

reconstruction and development programme tailored appropriately. In addition, structures need to be established to move much of this activity off-budget and into independent authorities - possibly receiving clearly identified public subsidies for delivering defined services.

Infrastructure is the sector most susceptible to overcapitalisation. Reconstructing power stations without a budget allocation for fuel or rebuilding roads that cannot be maintained are poor investments. During the emergency phase, the focus was on restoring service. With the move to a longer term development focus, attention must now be paid to the sustainable level of infrastructure, taking into account the fiscal capacity of the country. This shift in focus makes overall sector coordination crucial, with the recurrent cost implications of any investments to the fore.

Complicating this issue is the significant investment in infrastructure that was undertaken prior to the ballot. Much of this infrastructure is of poor quality and portions of it were: developed to support military, rather than social or economic goals. However, there are expectations of a return to pre-1999 levels of service, if not an increase in these levels. This will not be possible over the next five years, so expectations will need to be managed.

The requirement to deliver draft long term business plans in the aviation, ports, roads, power and water sectors by March 2001 will allow consideration of these issues in discussions over the 2001-02 Combined Sources Budget. It will also allow the extent of cost recovery to be considered - a key aspect in determining what, if any, public subsidies should be provided to these enterprises.

The second issue revolves around the legal and operating status of the major infrastructure service providers. It is proposed to establish aviation, maritime, power and water as independent authorities off-budget. Considerable care will need to be taken to balance autonomy with appropriate oversight. Ultimately poor service delivery or financial failure will result in pub1i.c liability.

6. Sustainable Public Finances The transition to full independence needs to be supported by strong financial management systems and human resources., together with a sustainable financial plan. This is key to ensuring that the new state generates sufficient resources to pay for the commitments undertaken during the transition, and any new commitments

The CFET has been necessary after independence. spending below projections ... In the first four months of the fiscal year, $4.8 million has been

disbursed from the CFET, for spending under the East Timor

. .. but is expected to pick up.

The TFET has disbursed $1 7.3771, to date, $66.3m by the end of 2000-01

High priority unfunded items are annexed - with a focus on supporting the lransition.

Revenue collections are higher for 2000- 01, but projected lower for later years.

Choosing the suslainable level of public spending is d$ficult .. .

... but household surveys and national accounts data should give some guidance

Consolidated Budget presented to donors at Lisbon. An additional $10.5 million has been committed. (Detailed figures are in Annex B.) This is below projections and is partly due to the natural process of introducing service delivery, and partly due to problems in supply and procurement. The reallocation of unspent first quarter funds to higher priority areas and the addressing of procurement problems are expected to significantly increase the disbursement rate.

The TFET has disbursed a total of $17.3 million over the calendar year and $14.2 million over the last four months since Lisbon. With disbursements accelerating rapidly in September and October the TFET is estimated to disburse $66.3 million by the end of the financial year.

The Budget has since been revised, taking into account changing priorities and the low level of spending in the first quarter. During this revision process, the Cabinet also prepared a list of priority areas that are currently unfunded. The highest priority items are presented in Annex A. In deciding priorities, the Cabinet paid particular attention to items that would assist the transition. The Cabinet also agreed that the list be maintained and updated regularly by the NPDA. Cabinet should specifically approve any bilateral or multilateral assistance outside these areas, in order to ensure that such assistance is in line with national priorities.

Revenue collections for 2000-01 are expected to be above the June estimate due to higher collections on imports and the introduction of new measures. (Details are provided in Annex B) However, forward projections are significantly below the targets presented in June. Additional measures will need to be considered if these targets are to be reached.

Some of the new priority areas identified during the Budget Review will have ongoing cost implications. This has created pressure, which will need to be addressed during the 2001-02 budget process. However, choosing a sustainable level of public spending is complicated by uncertainty over the revenue raising capacity of the economy. The medium term revenue estimate presented at Lisbon was $45-50 million. At that time it was noted that there were no reliable estimates of the revenue raising capacity of the economy. This situation has not improved. For example there remains considerable uncertainty about the population size and changes in the sectoral composition of the economy.

Both household surveys and preliminary national account exercises are planned for the next 6 months. This work will provide a better estimate of the long term revenue raising capacity of the economy. In addition, work on the likely fiscal impact of activities in the Timor Sea in the medium term will be undertaken. Based on these

studies, revenue projections will be revised and a five year financing projection agreed with the IMF and World Bank.

Good progress has been made in establishing systems

. . both regulations.. .

. . . and processes

Now the systems need to be developed in partnership

The appointment of senior staffis key ...

. . . so too is a detailed plan for post-independencr TA

There are pressure? for higher spending.. .

... which may be unsustaina ble

The key indicator is a sustainable budget produced by an East Timorese CFA.

Considerable progress has been made in establishing systems and processes that will support sustainable public finances. Since June major regulations have been passed on financial management, appropriations and taxation measures. Regulations passed through the National Council in the first two weeks of November revised the appropriations for the CFET for 2000-01, tightened exemptions to stop revenue leakage and introduced a wages tax.

Several other processes and systems have been introduced. These include the development of detailed expenditure procedures by the Treasury, the installation of FreeBalance software to track and monitor expenditure, and the development of custom software to track appropriation changes.

The systems and processes that have been developed provide a good starting point. However, to date they have been developed and implemented almost exclusively by international staff. To ensure longer term sustainability it is essential that ongoing development of the systems be undertaken in partnership with East Timorese staff. In this context, many of the benchmarks for sustainable finances are unchanged from the current year. The key is to facilitate the delivery against these benchmarks by a Central Fiscal Authority staffed predominantly with East Timorese.

The risks to sustainable public finances split into risks about people and risks about the numbers. The staffing and training of the Central Fiscal Authority by East Timorese will require considerable work, particularly at the very senior levels. The identification of the appropriate people and the sourcing of funding for international technical assistance on an ongoing basis will also be a c,hallenge.

The risks about the numbers relate to closing the financing gap in the recurrent budget. These risks include:

pressures on wages - which at senior levels are judged to be inhibiting the recruitment of qualified professionals;

pressures associated with the ongoing costs of the recently announced policy measures; and

the possibility of excessive capital investment that cannot be maintained.

The uncertainty around the long term fiscal capacity :suggests that caution should be exercised when considering the issue of wage changes. It also suggests that a very strong prioritisation process will need to be undertaken in the 2001-02 budget process. Finally, the preparation of the 2001-02 budget on a combined sources basis will go a long way to addressing problems of overcapitalisation.

However, the successful preparation and execution of the budget by East Timorese staff, with international staff predominantly as advisers will be a better indication of whether the issue will be successfully addressed in the medium-long term.

7. Conclusion

The Brussels meeting is not a pledging meeting, since a large part This is not a of the funds pledged in Tokyo and Lisbon remain to be disbursed. pledging meeting Total external financing requirements for the CFET and TFET in

2000-01 total $104.95 million. It is estimated that this external financing requirement will be met in full provided existing pledges and expressed donor interest are realised in a timely manner. These will be supplemented by substantial bilateral, multilateral and NGO projects.

The focus is to build a consensus around a strategy.. .

... then broaden the consensus

Support for these milestones is a start.. .

. . . implementation is critical

Additional targeted assistance is sought

The major focus in Brussels is to build consensus around the key steps over the next 12 months. The strategies outlined in this paper have been developed in close consultation with the East Timorese leadership, both in the transitional Cabinet and the National Council. The next step is to build broader consensus around this approach.

The National Council is planning to hold wide-ranging discussions on the political handover and the handover of all other aspects of government functions.

A key outcome from Brussels would be a clear agreement amongst all the development partners on the way forward.

These discussions will feed into the development of a broader vision and detailed implementation plans for each area.

The support for the milestones presented in this paper, and agreement on detailed implementation plans make a successful transition to an independent East Timor more likely. However, they do not guarantee it. Strong efforts on implementation and monitoring will be essential - including devising innovative solutions to problems encountered. A comprehensive review of progress will be undertaken as early as May next year.

In addition, very specific and targeted supplementary assistance will be sought from the international community to support the transition strategy presented here. During the budget review process in October, Cabinet compiled a list of unfunded priorities, focusing on the activities needed for a successful transition. The highest priorities are presented in Annex A. Those relating most immediately to the transition total $1 1.3 million, and cover the critical areas of support to the constitutional and electoral processes, and to administrative handover within the civil service.

Coordination amongst all the East Timor is a test case for effective aid coordination. Achieving

coherence between government programmes and externa,lly funded partners.. . assistance is vital. All development partners, along with civil service departments and managers, will need to continue their

. . . can lead to a strong commitment in the year ahead. It is essential that economic successfuL sfable and social development underpins the political transition to a stable and sustainable and sustainable independent East Timor. transition

Annex A

High Priority Unfunded Projects up up port in^ the Transition

Support for Democratic processes:

Support to National Leadership - Training, technical assistance andpolicy support to the East Timorese national leadership during the transition period.

Support to the National Council - Training and workshops to support the operation of the National Council.

Electoral process and development

Electoral administrative capacity development - Trainingprogrammes as well as technical and material assistance to establish an electoral oflce for the 2001 elections and to develop this capacity for future elections.

Civic education campaign on voter rights and election procedures - Major nationwide education programmes on democracy, civi l rights and obligations, voter rights and electoral procedures.

Accelerating Timorese Recruitment

Human Resources Strategy, recruitment and management - Support to ETTA to develop an appropriate human resources strategy and to provide specialist assistance with recruitment and management training.

Accelerated training of Timorese Civil Servants:

Support to the Civil Service Academy - Trainingprogrammes and learning materials for civi l servants delivered through the Civ i l Service Academy.

Institutional Development

Institution building for national and local administration - Training, workshops and organisational design assistance for local and national government machinery.

National and local development planning and coordination - Training and' technical support to the National Planning and Development Agency and to local development coordination mechanisms.

Interpretation and Translation support for ETTA - Provide sufficient translation and interpretation services to E V A to manage the transition to independence bey facilitating communication between international stafj; E V A civi l servants and the community.

Demobilisation and Reintegration

Support requiredfor reintegration, including vocational training, for FALINTIL, and other ex-combatants. 1,300

Oecussi and Atauro Ferry service

Capitalfunding (and a j i ve year operational budget) to procure or subsidise a ferry service to operate between D i l i and Oecussi (including Atauro) to ensure continued strong relations with the enclave during the transition.

Annex A

Other High Priority Projects

Expansion of the School system to cater for higher than expected enrolments:

1000 additional teachers for five years - To reduce pressure on class sizes following higher than expected enrolments.

Restoration and reconstruction of additional classrooms - Restoration of classrooms and new schools for an additional 40,000primary school students.

Airport Management

Assistance to run and maintain the Dili and Baucau airport, including training and in-line technical assistance. (Note: This project currently being explored and developed by Portugal)

Fisheries

Basic fishing equipnzent forfishers, estimation and monitoring of near shore fisheries resources, deployment offish aggregating devices and smallfishing vessels for ,fishers.

Figures presented in these tables are estimates. They are designed to give an order of magnitude. Some of the projects would need to be developed and assessed in greater detail, particularly to ensure that recurrent cost implications are fully captured.

Annex B CFET Budget Execution - July-October 2000

Rev Budget = revised appmpriation for 2000-01 following the budget review; EAN = expenditure auVlorisation notice (ie the amount of the appmpriation that has been authorised for July - October 2000

- 29 -

Agency

I Agricullure 2 Avialial 3 BorderServi 4 Cabinel of Transitiond Administration 5 Census and Resemh 6 Centrd Administration 7 Cenhd F i i Authority 8 Cenhd Payments Omce 9 Civil Ragitrar 10 Civil Security, Fre Emergenq Relief I I Civil W i Carnrission 6 Academy 12 Commerce, lndusby and Tourism 13 District PubliiWorks 14 East Timor Defence S d I5 East Tim Pdke Service 16 Educalion. Youlh and Cubre 17 EnvironmenU Rolection 18 Fuaign Affan 19 Hedm Zl Investment lnslilute 21 Judicial Affain 22 Land Commission 23 Maritime port Authority 24 Nationd Archives 25 Nab'ond Council 26 Nationd Inslilute of Mapping Geodesy Z l Naticmd Planning and Development Agency 28 Office of the lnspeclw Generd 29 Office of Transilional Administrator 30 Polikd. Cmslitubnd Eleclwd 31 Pc6lO1lce 32 Power Authorily 33 Roads 34 Social Services 35 Telecommunications 6 lnlernel 36 Terrilwial Administration 37 University of Easl Timr 38 Vehicle Registration Unit 3 Walei and Sanilatbn Aithoritf 40 Conlingent Expenditure

TOTAL

Wages and Salaries Goods and Services Capital Total

Comm Disbur Rev €AN Comm Disbur Rev €AN Comm Disbur Rev €AN Comm Disbur -itted -sed Budget -itted -sed Budget 4tted -sed Budget -itted -sed

-

Rev Budget

€AN

Dl n n 73 42 14 IS IS 378 126 m 93 1% 37 42 34 0 7 7 7 58 18 I I II 182 62 34 34 n 30 I I I1 49 22 0 0 512 pl 218 218 48 17 13 9 41 18 0 0 92 59 5l 5l 2x3 0 0 0 817 128 95 95

~ 2 8 0 6 ~ 2 5 7 6 3 ~ 2 8 0 9 0 6 0 0 35 0 0 0 Im 639 516 516

9 4 0 0 42 1 114 126 126 129 48 31 31 n 17 7 7 I 1 2 2 2 145 0 0 0 10 5 0 0 58 0 0 0 5 0 0 0 0 13 0 0 12 13 0 0 38 14 8 8 448 I59 148 la 221 92 31 2S 48 18 I1 I1 34 14 4 4 321 m 17 17 485 5Q 0 0 30 10 0 0 1% 67 63 f3 0 0 0 0

16,sls 5.012 4,193 4.m

m 152 60 23 58 22 24 0 m 174 2 2 75 7 9 9 0 51 I 0

395 84 19 IS 601 216 95 10 m 90 9 5 210 102 I I 17 20 I2 12 179 84 7 10 184 98 0 0 114 50 I1 2 728 0 0 0 &el 6% 485 33

801 82 0 7 I 0 55 0 0 0

4,tW 1.701 1,213 II 116 TI 4 0 514 219 218 7 224 l I0 10 9 101 26 14 o 43 % 2 0 3 0 0 0 9 4 0 0

151 0 0 0 11 0 0 0 iU 53 I8 0 48 37 I 1 39 19 0 0

4010 43% 3.498 146 414 g25 3 I W7 85 17 10 58 21 16 4

487 171 147 147 681, 76 0 0 40 14 13 0

2,141 910 812 3 XX) 0 0 0

n,m 113n 7 m ns

m m m m m m m m m m m m m m m m 55 0 0 0 90 % 79 67 4X) 325 78 0 45 0 0 0 0 I I I I 0

4,375 43M 146 0 128 90 BD 0

I,m7 912 612 2 21 0 0 0 250 0 0 0 31 0 0 0 40 0 0 0

1,155 111 Ill 0 0 0 0 0

735 641 21 % % '9 0 0 I1 3 0 0 0 0 0 400 0 0 0 67 20 M 0 817 SR &I3 I lpD3 447 433 0 60 M 17 o 135 40 40 0 0 0 0 0 XD ID 0 0 146 0 0 0 26 0 0 0 0 0 0 0 0 0 0 0 60 I 1 I1 0 950 362 232 0 '33 0 0 0 X1) % 83 0 40 0 0 0 75 71 59 0 1% 0 0 0 M 14 I I 0 240 240 130 0 0 0 0 0

1533 534 3 m 92

553 ZLS I33 % 1% 87 118 82 I.4CU 62.5 IT3 95 318 43 43 43 0 68 19 8

4&28 4,422 176 26 917 f28 i€9 44 I376 I 632 19 280 124 1 I T19 247 Z9 Z29 258 101 21 19 265 117 0 0 1361 ZXl 176 57 1,011 0 0 0 5 p 1,501 I p O 149 12,071 3661 3,431 2658

0 24 3 0 90 0 0 0

6875 U39 1.729 527 192 101 24 0

1,782 1,184 1,037 133 133 474 39 214 63 38 7 189 92 44 2 148 0 0 0 219 132 0 0 355 0 0 0 42 0 0 0 ZD 65 18 0 60 90 1 1 137 44 19 8

9,- 4gn 3 g n nl 34 26 1,535 917

455 19 Ill 22 132 35 20 9 SO 321 m 164

0 0 1,379 130 90 38 24 0 gssD 1,217 lp35 65 Xa 0 0 0

59,4% 25 .1~ 1 5 s 4 m

Table 1.1: Expendi tu re a n d Revenue

2000-01 2000-01 2001-02 2002-03 2003-04 Lisbon Brussels

$m $m $m $m $m

Expend i tu re CFET recurrent CFET capital TFET

To ta l CFET + TFET

Bilaterals 49.44 95.69 50.60 30.41 18.72

Domestic Revenue Timor Sea ~ e v e n u e ~

To ta l Revenue

a Revenue estlniates rounded to nearest ~ i i i l l i o~ i

b Iricludes revelicle from the existing ElanglKakatua field, but 1101 the Bay~dUndar~ field wliicli IS currently planned to stan produc~ng In 2005

Tab le 1.2: Financ ing

2000-01 2000-01 2001-02 2002-03 2003-04 Lisbon Brussels

$m $m $m $m $m

CFET

Revenue Carryover from pervious year Revenue for Jan- June 2000 Onshore Revenue Timor Sea revenuea Donor contributions (Lisbon budget) Addit~onal financingb

To ta l CFET f inanc ing

Confirmed pledges to end of financial year Additional contributions required

To ta l TFET f inanc ing

a) $7m in 2000-01 includes $6m associated with 2000-01, and an additional $ l m expected to be received in 2000-01, associated wit11 activities in 1999-2000. Tlie more detailed accouriting across years in Table 3.1 presents this split. See also note b to Table 1. I .

b) This assumes that additional Timor Sea revenue (ie all revenues above the $3m previously estimated for the period January 2000 - June 2001) is retained in the carryover, rather than spent. Hence the carryover is always greater than the additional Timor Sea revenue.

c) TFET financing does not match with TFET disbursements, as cash receipts are necessary in advance o f committing monies for subsequent disbursements. Rather, the TFET financing is the amount needed to sign grant agreements in thc period.

Tab le 3.1 Revenue Est imates

Domest ic Revenue

Imports Exports Serv~ces User Fees Other Income Tax Interest

To ta l Domest ic Revenue

Timor Sea Revenue

99-00 99-00 00-01 00-01 01-02 02-03 03-04 June Nov June Nov

m m 1 m m $m

To ta l Revenue 2-3 3.64 17 25 26 25 22

Annex C

Performance to Date This table provides summary information of progress in major sectors. The indicators are based on those presented to donors at the Donor Coordination Meeting in Dili in September. They focus only on the major sectors, which account for over 95% of the funding from the CFET and over 75% of the funding for reconstruction and, development. The targets are, in the main annual, or longer term. Hence much of the information presented below simply provides an indication of progress against the targets. More detailed performance information for TFET projects is available in the TFET donor council report. Additional information on performance, particularly of smaller ETTA agencies is presented in the Combined Sources Budget.

I 1 officers. 50 cadets per month (3 1 from the police training college and I

Progress to Sector

permanent office accommodation complete (partially occupied by three for ETTA staff departments). Contracts for the other

i. Office of the Deputy Transitional Administrator

Police Services I Recruit and train 500 police 1 147 Police officers have

Annual Tgrgets

Public Building reconstruction

I I I buildings are currently out to tender. I I ii. Social Affairs

month recruit courses)

Finalise the reconstruction of six ETTA buildings to provide

have been posted to districts.

The Caicoli Infrastructure building is complete. Fomento building partially

I I sector I

Health

holding seminars on financial issues and pharmaceutical regulation.

Draft options papers on health financing & role of the private

,

'The paper is currently being finalised.

August 3 1 2001 >90% of Villages have access to permanent source of

Draft regulations on pharmaceuticals in East Timor

By Aug 3 1 2001 >90% Health facilities with less than 2 weeks of stock out of selected essential drugs over a three month period

By March 3 1 2001 >40% Health facilities selected in district health plans appropriately utilised (increasing to >SO% August 3 1 200 1 )

health care

Policy development has commenced with international experts providing policy advice, technical assistance and

It is not possible to report at this stage. As an input to this, an Essential Drugs List has been drawn up to ensure rational and cost effective drug prescription.

District Health Plans which were completed in September are underway in all districts outside Dili. It is not possible at this stage to comment on how appropriately they are being utilised.

Measurement against this indicator is not yet possible. On an output basis 116 mobile clinics, 3 hospitals, 85 health posts, 10 community health centres with beds and 53 without beds are currently operating in East Timor.

Annex C

80% of children have been immunised against polio and provided with Vitamin A.

Poor population data make assessment against this target difficult.

Poor population data make assessment difficult. Out of 1.3 million text books purchased 600,000 have been distributed.

800 classrooms have been re-roofed and more comprehensive rehabilitation work has started on 600 classrooms.

The Office of Labour and Social Affairs was established in August.

Work has begun on regulating employment standards and labour relations laws.

No progress to report at this stage

Education

Social Affairs

I

iii. Infrastructure

By March 3 1 2001>30% of Children under 1 yrs fully immunised (increasing to >60% August 3 1 200 1)

By October 3 1 2000 >50% primary and junior secondary students enrolled in schools

By October 3 1 2000 >80% students with text books

By October 3 1 2000 1200 classrooms to basic operational standard

Establish Office of Labour and Social Affairs

Formulate labour laws and regulations employment standards & employment policy

Formulate policies on social security and social science

Power is being provided on a 24 hour basis to Dili and Baucau and 6 hourly in all other regions. There have been significant problems in Dili recently caused by the need for load shedding.

There have been significant problems in the Power Authority due to budget over-runs and poor cost recovery.

Consulting services have been engaged to inspect 15 rural power stations to identify rehabilitation requirements. Physical rehabilitation will be delayed until after the wet season.

Physical rehabilitation will be delayed until after the 2000-2001 wet season.

Nil progress to report.

Basic water supply services have been restored to all 13 district capitals. Procurement of the necessary materials to maintain and operate this system is currently being finalised.

This indicator becomes much more significant during the wet season.

On an input basis, road maintenance was conducted in Viqueque, Ermera, Baucau and Liquica. District Administrators in Liquica, Viqueque and Baucau have identified rehabilitation work requirement on important district roads and arranged

Power

Water and Sanitation

Roads.

24 hour power service in Dili and Baucau and 6 hr power service in all other regions

Rehabilitate 15 Power Stations

Rehabilitation of power distribution lines (kms)

Restore communications between Dili and outlying power stations in regions

Piped water available in main towns (13) in all districts.

Maintenance of main north coast road and feeder roads crossing East Timor northlsouth

Annex C

v. Internal Administration

Civil Service and Establish functioning Civil Service Public Employment Academy to train local East

1 Timorese to work in Government

local contracts to re-open them to traffic.

Site specific road repairs have been done in Baucau, Viqueque, Manatuto, Ainaro, Same, Bobonaro and Oecussi.

Bridge work will begin November 2000 and last until June 2001.

Cargoes are being loaded and unloaded with little congestion, at a standard in line with international norms. More precise performance measures - possibly total wait dayslmonth will be agreed in the 2001 -02 budget context.

The wharf has been extended by 49 meters.

Dili Port

Border Service Establish and maintain border control and customs stations at all main transport corridors into East Timor (Land, Sea & Air)

Develop marine capability

Emergency road repair

Operational Port facilities

Restore landing craft slipway and container yard at Dili Port

Indonesia on land corridor to Oecussi

iv. Economic Affairs

At the end of October, 5,776 public servants had been recruited to ETTA. More detail is at Annex D. 1,223 participants had attended courses run by the Academy.

6 out of 17 Border Control Stations have been established and are functioning in East Timor.

Two 7-meter marine patrol vessels will be operational by January 200 1.

An agreement in principle has been reached on the establishment of a border regime to facilitate access for people and goods between the Oecussi enclave and the rest of East Timor as well as cross-border trade.

>65,000 cows and buffaloes vaccinated

At the end of November, 50km of feeder roads will have been reconstructed.

A manual for the operation of the pilot agricultural centres is being written. Buildings have been identified in Viqueque, Bobonaro and Lautem and local tenders have been issued for their rehabilitation.

Radio stations are planned to be operational by April 200 1.

130 head of cattle have been purchased and distributed.

No chickens have been distributed to date but a proposal to establish and run a local hatchery is being discussed with the East Timor University.

Agriculture Reduce mortality rates in cattle, buffalo and small ruminants to 12%

Reconstruct lOOkm of feeder roads

Establish 5 Pilot Agricultural centres ( I 5 staff)

Establish 2 Community Radio stations

Provide 1500 head of buffalo and Bali cattle to selected farmers

Provide 60,000 chickens to selected farmers

Annex C

Territorial Administration

Civil Security, Fire and Emergency Relief

vi. Judiciary Judicial Affairs

Provide training and skills transfer to District Administrations

Develop mechanisms for consultation and advice between District Administrations and community leaders

Establish Office and management systems for local government

Facilitate information flow between districts and Central Administration

All government buildings and agencies

Establish 3 Fire and Emergency Relief Stations in Dili, Baucau & Aileu

Land and Property Unit

On the job training as well as formal training, including a recent study tour of New Zealand, has commenced.

3 East Timorese have been appointed as District Administrators, and 6 as Deputy District Administrators.

Administrative systems have been established in the districts. A programme for capacity building and training for East Timorese administrative staff will begin in December.

All district administrations provide weekly updates to Territorial Administration as well as regular meetings between DAs and the central office and the relevant sectors.

30 Government facilities are currently being guarded.

3 Fire and Emergency Relief Units are operating out of Dili, Baucau and Aileu.

Establish 1 National Court of Appeal and 4 District Courts

Engage 12 public defenders to support the Courts

Establish a legal drafting capacity

Re-establish Prisons in Becora, Baucau & Gleno (aggregate capacity 500 prisoners)

Complete pilot cadastral survey of two sucos in Dili

Establish Land registry office public counter in Dili

Establish conflict resolution institution to oversee implementation of regulations

National Court of Appeal is established and is hearing cases. District Courts in Dili and Baucau are fully operational. Locations of District Courts in Oecussi and Suai have been identified and refurbishment is underway.

9 public defenders are currently supporting the court system.

No progress to report.

Becora and Gleno prisons are fully operational (capacity of 235). Baucau will be open at the end of November (capacity of 30).

Pilot cadastral surveys complete.

Cabinet has decided that the Land and Property Unit will register claims to land but not land titles

Cabinet decided to defer consideration of the issue of the jurisdiction of the District Court to finally determine land disputes

vii. Finance The regulation to establish a taxation regime in East Timor has been approved by the National Council

Some categories of revenue are above estimate, others are below (see Annex B).

Tax Administration Tax framework legislation established

Tax collections track estimates

B). Treasury Actual budget expenditure tracks Treasury systems have highlighted the

budget estimates within 10% slow disbursement of budget

1 1 and first quarter u~date distributed.

Salary ($US p.a.) Stipend ($US p.a.)

Total Original Budget (June 2000) Revised Budget (Nov 2000)

Staff recruited Pernlonent: Stipend contract:

Education Revised Budget (Nov 2000)

Staff recruited

Health Revised Budge t (Nov 2000)

Staff recruited Pernioncnt:

Stipend conrroct:

Judicial Original Budget (June 2000)

Revised Budget (Nov 2000)

Staff recruited Pernionent: Stipend contract:

All other Original Budget (June 2000) agencies Revised Budget (Nov 2000)

Staff recruited Per~no~~enl: Stipend contract:

Non- Leve l 1 Level 2 Level 3 Leve l 4 Leve l 5 Level 6 Leve l 7 Tota l S t a n d a r d S t i p e n d 1 S t i p e n d 2 S t i p e n d 3 S t i p e n d 4 S t i p e n d 5 Staff

Actual staff numbers are based on October payroll data and reports to CFA from individual departments. Permanent staff are employed on the salary scale. Civil servants were initially employed under a short term stipend system. Civil servants are being moved from stipends on to the salary scale. The original staffing figures are the numbers agreed by the NCC as part of the 2000-01 Budget, presented at Lisbon. The revised staffing figures reflect changes made in the Budget Review. The armed forces are included as non-standard as their salary scale has not been finalised. The other non-standard positions are not budgeted. They include a number of positions that have been 'inherited', where employees are paid above the salary scale - such as the ex-DFID power workers. The number of employees in this category has been reduced significantly over the last five months