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Although Timor-Leste met the least LDC graduation criteria of GNI per-capita and the human assets index during the 2018 and 2021 triennial reviews and was found eligible for graduation, it was recommended that graduation be deferred to 2024, owing to continued concerns about the sustainability of the country’s development progress.
Pathways towards LDC graduation and achieving the Sustainable Development Goals are broadly defined in the country’s strategic development plan and the sustainable development framework, which are being implemented through the SDG road map and the Government’s short- and medium-term plan.
Timor-Leste has made substantial economic progress over the past 20 years but graduating from LDC remains challenging and fully achieving any of the SDGs by 2030 is unlikely under the current development pace. Noted progress in development gains has been in the benchmarks related to school attendance, child and maternal health, and electricity access. Timor-Leste, however, is lagging with regard to poverty reduction and equality of access to quality services and opportunities. Prospects for the country’s sustainable development is uncertain in view of a significant decline of oil revenue, limited economic diversification and a recent slowdown in economic development.
Tangible and more practical actions are needed to prepare for LDC graduation and progress towards achieving the Sustainable Development Goals. Timor-Leste needs to
enhance the implementation of the development framework by integrating strategies for graduation into the planning framework, building institutional capacities, including the establishment of a national committee for LDC graduation, and promoting good cooperation and partnerships with development partners to efficiently deliver services at all levels of governance.
A conducive macroeconomic and business environment and prudent fiscal policy must underpin the economic diversification process and private sector development in order to attain vibrant and inclusive growth, which are paramount for the country’s preparation to graduate from LDC status as well as for it to build a resilient economy. The Government needs to immediately restore macroeconomic stability and quickly recover from recent economic recessions. Prudent fiscal policy grounded in fiscal sustainability and rationalization of expenditure are necessary to build sustainable infrastructure, as well as for human capital development, facilitation and promotion of private sector investment, and economic diversification based on the development the following there sectors: agriculture; tourism; and manufacturing. Creating more market opportunities for investment and trade through economic integration are important – mobilizing resources under the Belt and Road Initiative for infrastructure development and accelerating the country’s accessions to WTO and ASEAN needs to be promoted. It is also critical for Timor-Leste to ensure the sustainability of the Petroleum Fund, mobilize more tax and domestic resources through efficient tax administration and policy, enhance implementation of the “Foreign Aid Policy” for efficient management of ODA, mobilize more external concessional borrowings, and encourage mobilization of private sector resources through PPP, equity participation, and the development of institutions and legislation for the creation of a bond market.