[{"bbox": [85, 154, 332, 186], "category": "Section-header", "text": "# 2 RATIONALE"}, {"bbox": [85, 220, 235, 247], "category": "Section-header", "text": "## 2.1 Context"}, {"bbox": [97, 272, 1133, 360], "category": "Text", "text": "Since 2014, the EU has supported the government of Timor-Leste in carrying out Public Finance Management reforms. In 2022 and 2023, the EU provided legal and technical assistance to support the government with a new fibre-optic cable."}, {"bbox": [97, 370, 1133, 519], "category": "Text", "text": "Our support for the government's digitalisation processes in Timor-Leste, with a specific focus on PFM and ongoing digital initiatives, is designed to bring about tangible benefits. These include better budget alignment with public sector policies, enhanced fiscal discipline, efficient expenditure allocation, improved public services, and increased service delivery efficiency. Ultimately, the aim is to foster inclusive development through the effective use of digital technologies."}, {"bbox": [97, 528, 1133, 647], "category": "Text", "text": "Supporting the government on increasingly important digitalisation processes in Timor-Leste, with a focus on PFM and ongoing initiatives related to the provision of a variety of digital services, will aim, in a close and complementary way, to better align budgets with public sector policies, enforce fiscal discipline, and facilitate efficient expenditure allocation."}, {"bbox": [97, 656, 1133, 714], "category": "Text", "text": "This support will also aim to deliver improved public services, enhance service delivery efficiency, and foster inclusive development through digital technologies."}, {"bbox": [97, 724, 1133, 843], "category": "Text", "text": "It will also build on the alignment with government priorities on PFM (Timor-Leste Public Financial Management Reform Strategy 2022-2027, MoF's Five Year Strategic Plan 2024-2028) and Digitalisation (National Strategy for Financial Literacy 2022-2027 and Timor Digital 2032) and Consolidate the EU's position as a critical partner on Digitalisation and PFM in Timor-Leste."}, {"bbox": [85, 867, 341, 897], "category": "Section-header", "text": "## 2.2 Problem Analysis"}, {"bbox": [97, 920, 1133, 1069], "category": "Text", "text": "Timor-Leste is a fragile, small island developing country. Following its independence in 2002, its institutions are still in construction and consolidation. Timor-Leste has undergone a continuous process of PFM reform, which has been affected by political instability, limited capacity of its human resources, and, more recently, the COVID-19 pandemic. Consequently, the country still requires support to move forward with institutional reforms in general and PFM reform in particular."}, {"bbox": [97, 1078, 1092, 1105], "category": "Text", "text": "This document is based on several diagnostic studies and assessments carried out over the last years, namely:"}, {"bbox": [97, 1115, 1133, 1170], "category": "List-item", "text": "- PEFA 2018 provides a thorough assessment of the status of the PFM system in Timor-Leste from 2015 to 2017."}, {"bbox": [97, 1181, 955, 1209], "category": "List-item", "text": "- Public Investment Management Assessment 2016, elaborated by the IMF (not published)."}, {"bbox": [97, 1219, 716, 1246], "category": "List-item", "text": "- Public Expenditure Review (PER) 2021, elaborated by the WB."}, {"bbox": [97, 1256, 854, 1283], "category": "List-item", "text": "- The Tax Administration Diagnostic Assessment Tool (TADAT), still ongoing."}, {"bbox": [97, 1293, 881, 1320], "category": "List-item", "text": "- Methodology for the Assessment of Procurement Systems (MAPS), still ongoing."}, {"bbox": [97, 1330, 1133, 1387], "category": "List-item", "text": "- The EU annual public finance assessments and the lessons learned from the previous budget support program, \"Public Financial Management and Oversight\" (PFMO), which ended in December 2022."}, {"bbox": [97, 1396, 1133, 1576], "category": "Text", "text": "PFM reform seems, however, to be gaining momentum with the approval in December 2022 of the Public Financial Management Reform Strategy 2022-2027, which aimed to improve accountability, transparency, and service delivery. Meanwhile, the new government team that emerged from the May 2023 general elections has expressed the intention to pursue the PFM reform initiated by the previous government and even to integrate its objectives and indicators of this reform in the future five-year work plan of the Ministry of Finance (MoF's Five Year Strategic Plan 2024-2028)."}, {"bbox": [1034, 1680, 1141, 1705], "category": "Page-footer", "text": "Page 6 of 41"}]