ESW - Economic and Sector Work

The development objective is to help improve the quality of public spending on infrastructure. The analysis proposed to be conducted will review overall budgetary expenditure trends, and aim to assess the effectiveness of public spending and related institutions in areas such as roads, irrigation and electricity generation. The analysis is to be conducted jointly with the Ministry of Finance which will help strengthen capacity in the Ministry for undertaking such work.

The Government of Timor-Leste has sharply increased infrastructure spending in recent years to boost economic growth, improve service delivery and reduce poverty. The World Bank and the government will together undertake a Public Expenditure Review of spending in infrastructure (PERI). The analysis will seek to make concrete recommendations on how to lower the cost of public roads, irrigation and electricity sub-sectors, as well as increasing the quality and /or quantity of outputs from public spending in these areas. This is broadly referred to in this concept note as an analysis of efficiency and effectiveness of public spending. The PERI will consist of three main parts. Part 1 will review trends in infrastructure spending and its past and likely future impact on fiscal sustainability and economic growth. Part 2 will undertake a detailed review of the institutions for planning, budgeting and implementing infrastructure projects, including efficiency of procurement. And Part 3 will examine sector infrastructure activities in more detail including budgets, and the management and outputs of selected projects in the areas of roads, irrigation and electricity supply, including life-cycle costs. The analysis of the electricity sector will concentrate on likely future recurrent costs and cost recovery. Outputs will include a series of policy notes with recommendations on the link between public spending, growth and fiscal sustainability in Timor-Leste (Part 1), institutional strengthening to improve this link (Part 2), and ways to achieve cheaper and better outputs in roads, irrigation and electricity sub-sectors, including procurement and life-cycle costs (Part 3). Analysis, recommendations, and written outputs in Parts 1 and 2 will be informed by sector specific evidence and findings in Part 3, requiring some sector work to proceed simultaneously with work on parts 1 and 2. Given the sectors involved, this work will be done jointly with SDN. The first draft policy notes will be ready for discussion in September 2013. The PERI will be drafted by a team consisting of staff from the Ministry of Finance and World Bank and relevant line ministries.