[{"bbox": [96, 153, 1134, 212], "category": "Text", "text": "to central government and municipal civil servants included accounting, budgeting, execution, reporting, M&E, budget compliance analysis, procurement process, treasury management, and assets management."}, {"bbox": [96, 219, 1134, 339], "category": "Text", "text": "Substantial work is in progress, the results of which still need to be visible but which, in any case, reflect the government's intention to reform public finances under the direction of the Ministry of Finance. Such work is particularly significant in tax administration, procurement, accounting, and external control, which is compounded by the effort that has been made in capacity building covering the different public finance functions."}, {"bbox": [96, 346, 1134, 468], "category": "Text", "text": "Also, the new Ministry of Finance team, which took office on July 1st, 2023, has prepared a 5-year strategic development plan. This new strategy will include the strategic objectives of the PFM action reform plan) and should be presented to the donor partners in the second quarter of 2024. The need for better reporting on the strategy has been mentioned as key and is expected to be addressed in the new 5-year plan."}, {"bbox": [96, 475, 1134, 596], "category": "Text", "text": "The former EU budget support program, PFMO, has strategically prioritised the establishment of architecture for oversight institutions and enhanced PFM information systems. Moreover, close coordination with authorities and key partners such as the World Bank, International Monetary Fund, Australia, and UNDP has facilitated intense dialogue on PFM reform strategies, revitalising efforts to develop and refine these strategies effectively."}, {"bbox": [96, 603, 1134, 785], "category": "Text", "text": "Furthermore, PFMO has played a crucial role in addressing pivotal aspects of tax reform, as evidenced by the design of variable tranches within budget support programs targeting key DRM areas. Recent data highlights a notable increase in the share of revenue derived from income tax and taxes on international transactions, attributed partly to improvements in customs administration facilitated by the introduction of ASYCUDA World. The continuation of support in these areas, with a strong focus on digital transformation, will build on ongoing advancements, such as implementing an online platform for tax declarations and payments."}, {"bbox": [96, 792, 1134, 852], "category": "Text", "text": "In conclusion, the policy is sufficiently relevant and credible for the budget support contract objectives to be largely achieved. Therefore, the Commission can support the policy with the proposed budget support contract."}, {"bbox": [85, 873, 375, 902], "category": "Section-header", "text": "### 2.3.2 Macroeconomic Policy"}, {"bbox": [96, 922, 1134, 1254], "category": "Text", "text": "Timor-Leste, despite its progress since gaining independence in 2002, continues to face significant socioeconomic inequalities. The nation remains one of the poorest in Southeast Asia, with substantial disparities in income distribution and access to essential services. Rural areas, home to the majority of the population, suffer from limited access to education, healthcare, and infrastructure compared to urban centers like Dili. Unemployment and underemployment rates are high, particularly among the youth, exacerbating economic disparities. Gender inequality also persists, with women often having fewer economic opportunities and facing higher rates of poverty. Efforts by the government and international organizations to address these issues include infrastructure development, educational initiatives, and economic reforms, yet progress remains slow and uneven, highlighting the ongoing challenge of bridging the gap between different socioeconomic groups in Timor-Leste. With a Human Development Index of 0.566, it decreases a 19% when adjusting for inequalities (0.407).⁸ The Gini Index in 2018 was 28.7.⁹"}, {"bbox": [96, 1263, 1134, 1384], "category": "Text", "text": "Non-oil real GDP growth in 2022 soared to 4 percent, fuelled by the post-pandemic reopening and robust fiscal expansion. However, growth tapered off to 1.5 percent in 2023, attributed to challenges in budget execution surrounding the May elections, which constrained public spending. Inflation spiked to over 8 percent in 2023 due to surges in food prices and transport costs. Still, it receded to 4.3 percent year-on-year by January 2024."}, {"bbox": [96, 1391, 1134, 1543], "category": "Text", "text": "Anticipated growth is set to rebound to 3.5 percent in 2024, bolstered by the government's emphasis on public capital expenditure. Inflation is projected to further moderate to 2.5 percent by year-end, driven by the anticipated easing of global commodity prices. Long-term growth is expected to stabilise around the pre-pandemic average of 3 percent, with potential for acceleration through strategic policy interventions. According to the latest published data, ADB's projections are even more optimistic (https://www.adb.org/news/timor-leste-forecast-grow-3-4-2024-"}, {"bbox": [85, 1596, 211, 1619], "category": "Footnote", "text": "⁸⁸ UNDP 2022"}, {"bbox": [85, 1621, 255, 1644], "category": "Footnote", "text": "⁹ World Bank 2018."}, {"bbox": [1023, 1679, 1140, 1705], "category": "Page-footer", "text": "Page 12 of 41"}]