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Forecast 2011: Flashing the cash seen as the path to success— Dili

Preface

They may not yet have flat roads, regular electricity or a constant water supply, but work on Timor-Leste’s first mall is almost complete.

Timor-Leste

28 December 2010

They may not yet have flat roads, regular electricity or a constant water supply, but work on Timor-Leste’s first mall is almost complete. While it’s all systems go in the capital, Dili, where high-end developments are sprouting in the most unlikely places, two-thirds of the country who live in the hills and scrape by with subsistence farming activities are eager to see whether their government will deliver the goods on its far-reaching pledges for prosperity.

“Spend spend spend” – in targeted areas of course – is the order for 2011 and the government will be dipping into its oil wealth to execute a state budget of close to $1bn, reflecting steady year-on-year increases from a modest $262 million in 2006. It’s a strong play by a government that is heeding the advice of leading economist Jeffrey Sachs, who paid a visit to the fledgling nation in 2010.

The government will need to prove a lot of people wrong to come good on the wild predictions laid out in the country’s strategic development plan for the next 20 years. Leading civil society organisation La’o Hamutuk has already warned that overspending the nation’s savings in this way is unsustainable and a fast-track to disaster that could see funds dry up prematurely.

Never ones to shy away from the underdog role, Timor-Leste will be looking to carry on progress made heading the G7+ group of fragile states, which came together throughout 2010 to finally give donors a kick in the rear for the way billions of dollars in aid have been spent without sufficient understanding of country-specific priorities, leaving many developing nations way off track for achieving the ubiquitous Millennium Development Goals.

With Timor-Leste now the most peaceful it’s been since independence in 2002, there are growing expectations coming from its million or so people, who now need education and jobs rather than shelter and security. UN Police arrived in Dili in 2006 to quell internal conflict that led to the displacement of more than 150,000 people. Four years on and local forces have resumed control of policing responsibilities in most of the country – and there is growing pressure for a full handover by March 2011 in time for a general election slated for 2012.

The jostle for electoral support has already begun and with doubts over another power-sharing coalition, the race is on between Xanana Gusmão’s National Council of East Timorese Resistance and Lu Olu’s Fretilin party.

Though there is still a long way to go, Timor-Leste is taking the lessons learned on the rocky road from conflict to development and is now raising expectations that the nation will stay peaceful and draw further support from local and international players.

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