Country Operations Business Plan. Timor-Leste April 2016

Transcription

1 Country Operations Business Plan April 2016 Timor-Leste This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.

2 CURRENCY EQUIVALENTS The currency of Timor-Leste is the United States dollar. ABBREVIATIONS ADB Asian Development Bank ADF Asian Development Fund COBP country operations business plan COL concessional ordinary capital resources lending CPS country partnership strategy MFF multi-tranche financing facility MOL market-based ordinary capital resources lending OCR ordinary capital resources TA technical assistance TLRM Timor-Leste Resident Mission NOTE In this report, "$" refers to US dollars. Vice-President S. Groff, Operations 2 Director General X. Yao, Pacific Department (PARD) Team leader Team members S. Rosenthal, Country Director, Timor-Leste Resident Mission (TLRM) M. Caldeira, Senior Operations Assistant, TLRM E. Davidz-Morato, Social Development Officer (Gender),TLRM S. Lee, Principal Social Development Specialist, (Gender and Development), PARD J. Perreira, Senior Project Officer, TLRM R. Phelps, Principal Infrastructure Specialist, PARD S. Spohn, Private Sector Development Specialist, PARD M. Trainor, Energy Specialist, PARD A. Woodruff, Urban Development Specialist, PARD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 CONTENTS Page I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1 II. INDICATIVE RESOURCE PARAMETERS 1 III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 2 APPENDIXES 1. Country Assistance Results Area 3 2. List of Linked Documents 5 3. Indicative Assistance Pipeline 6 4. Assistance Program for Current Year 9 5. List of Indicative Knowledge Publications and Events 11

4 I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1. The country operations business plan (COBP) presents the indicative program of assistance that the Asian Development Bank (ADB) will provide to support inclusive growth and poverty reduction in Timor-Leste. The COBP builds on ADB s strategic foundations in Timor- Leste and presents a program to support the country s transition to more inclusive and private sector led growth. It acknowledges Timor-Leste s fragility and is closely aligned with the Strategic Development Plan , the Program of the Sixth Constitutional Government , the midterm review of ADB s Strategy 2020 and the ADB country partnership strategy The country assistance results areas are presented in appendix Timor-Leste faces serious challenges in meeting the basic needs of a young and growing population. Human development is improving from a low base, with 9 of the 29 millennium development goal targets likely to be achieved by The private sector remains at an early stage of development. Revenues from off-shore petroleum production are funding public investments in infrastructure and human capital and are also being saved in the country s Petroleum Fund, which held $16.2 billion (11 times non-oil GDP) in December The stimulus from rising public spending saw non-oil GDP growth average 9.5% between 2007 and Petroleum production peaked in 2012 and may end in 2021; prospects for developing new fields are uncertain. Long term fiscal sustainability requires public spending to stabilize so growth will increasingly depend on the private sector, which remains at an early stage of development. Economic diversification will require carefully prioritized investments and reforms to upgrade infrastructure, build human capital, and improve the business enabling environment. 4. The COBP presents a pipeline of proposed investments and technical assistance to address key constraints to inclusive growth and economic diversification. It indicates lending support for transport, urban services and energy. Technical assistance (TA) and grants will support development of technical and vocational education, increased access to finance, regional cooperation and integration, and capacity development. This choice of sectors is consistent with the country partnership strategy II. INDICATIVE RESOURCE PARAMETERS 5. Timor-Leste is a group B developing member country, and is eligible for concessional ordinary capital resources lending (COL) and market-based ordinary capital resources lending (MOL). The indicative resources available during for sovereign operations amount to $ million. This comprises $79.62 million of COL and $ million of MOL. 2 The final allocation will depend on the available resources, and the outcome of the country performance assessments. In addition, cofinancing and funding from other sources, including the subregional pool under concessional resources and MOL regional cooperation and integration set-aside, will be actively explored. 1 Government of Timor-Leste Strategic Development Plan Dili; Government of Timor-Leste Program of the Sixth Constitutional Government: Legislature. Dili (accessible from the list of linked documents in Appendix 2). 2 Terminology reflects combination of ADF lending operations with the OCR balance sheet that will take effect on 1 January For 2016, COL and MOL stated here should be understood as ADF lending and OCR lending.

5 2 6. Strong demand for ADB assistance is reflected in standby projects identified by the government and ADB that will be pursued subject to resource availability and good ongoing portfolio performance. Substantial government cofinancing of ADB-supported investment projects is expected. The indicative lending pipeline, subject to available resources, is in Appendix 3, Table A The nonlending program will be used to prepare investment projects and sector reforms, develop technical education, expand access to finance, and strengthen regional economic integration. Targeted technical assistance will build capacity for evidence based policy and the implementation of social and environmental safeguards. Support for economic and public sector management, and the use of public private partnerships will be supplemented through regional facilities including the Private Sector Development Initiative, the Asia Pacific Project Preparation Facility, and the Pacific Economic Management TA. The indicative nonlending pipeline is in Appendix 3, Table A Given the increase in lending over the COBP period, transport and urban water supply sector specialists will continue to be outposted to the Timor-Leste Resident Mission and a new international staff position will support country economics work. This will enable the Resident Mission to continue leading country programming and country economic work, assume increased responsibility for project administration, and contribute to strengthened policy dialogue, knowledge sharing, and coordination with development partners. III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 9. This COBP positions ADB to facilitate transformative improvements in infrastructure services, technical education, and the enabling environment for the private sector. Loan financed investments in transport, energy, and urban services will leverage financing and expertise from government and the private sector. These investments will help to ensure the success of ongoing reforms to introduce sustainable operations and maintenance. Grants and technical assistance will be used to prepare loan financed projects and to support development of TVET and an inclusive financial sector. The non-lending program will also support strong synergies with ADB s loan and grant funded projects. These include regional cooperation and integration, and capacity development for infrastructure planning and management. 10. A key change to the lending program is the introduction of multi-tranche financing facilities (MFFs) for energy and urban water to support long term programmatic approaches. The timing of loan financing for investments in road and water transport have been adjusted to reflect progress in project preparation and expectations about future needs. Preparation of the Tibar Bay port project has been delayed so indicative financing has been reprogrammed to A follow on loan project for road upgrading has been reprogrammed from 2016 to 2018 to reflect the evolving investment needs in the sector. 11. The non-lending program has been adjusted to reflect the progress of ongoing technical assistance (TA) and to support emerging priorities. In 2016, ADB TA will build capacity for regional integration and economic policy and help to prepare investments and reforms in the electricity sector. A grant funded education project has been deferred to 2017 to ensure linkages with other support to the sector. ADB will continue to support development of an inclusive financial system, with additional TA programmed for An updated pipeline is presented in Appendix 4. The list of indicative knowledge publications and events is presented in Appendix 5.

6 Appendix 1 3 Country Assistance Results Area ADB Key Country Development Outcomes that ADB Contributes to 1. Energy Key Areas of Assistance Indicative Resource Allocation in Changes from Last COBP Improved coverage and reliability of electricity services Use of public private partnerships for electricity. Reduced subsidies for infrastructure operations and maintenance. Energy sector development and institutional reform Enhanced energy efficiency and transmission and distribution Enhanced enabling environment for private sector investment into energy sector, policy, and regulations Amount: $19.15 million (COL), $29.15 million (MOL) Share of COBP envelope: 20.6% Increased use of renewable energy resources 2. Transport Reduced time and cost to transport goods and people by road Increased international shipping capacity Outsourcing of road maintenance to private sector. Roads, road safety, and asset management Water transport Transport policies and institutional development Amount: $ million (MOL) Share of COBP envelope: 43.8% Use of public private partnerships for operations and maintenance of ports Reduced subsidies for infrastructure operations and maintenance. Climate proofing of new and existing infrastructure 3. Water and Other Urban Infrastructure and Services

7 4 Appendix 1 ADB Key Country Development Outcomes that ADB Contributes to Key Areas of Assistance Indicative Resource Allocation in Changes from Last COBP Increased access among urban households to reliable clean drinking water supplies Improved environmental health conditions in urban centers Urban planning, policies, and reforms New institutional structures for efficient and performance-based service delivery Priority water and sanitation infrastructure Amount: $39.29 (MOL), $60.47 (COL) Share of COBP envelope: 42.5% Use of public private partnerships for operations and maintenance of urban water supply Increased private sector participation More market-based infrastructure and management Reduced subsidies for infrastructure operations and maintenance 4. Education A skilled workforce with improved technical and vocational training 5. Finance Technical and vocational education and training Education sector policy Amount: $0 million (COL), $0 million (MOL) a Share of COBP envelope: 0% Improved availability and efficiency of financial services. Inclusive finance, Finance sector development Amount: $0 million (COL), $0 million (MOL) a Share of COBP envelope: 0% ADB = Asian Development Bank, COBP = country operations business plan, COL = concessional ordinary capital resources lending, CPS = country partnership strategy, MOL = market-based ordinary capital resources lending, PPP = public private partnership. Source: ADB estimates. a Support for Education and Finance will be provided through grants and technical assistance that is not included in the COBP envelope

8 5 Appendix 2 LIST OF LINKED DOCUMENTS 1. Programme of the Sixth Constitutional Government, Timor-Leste Strategic Development Plan,

9 Appendix 3 6 INDICATIVE ASSISTANCE PIPELINE Table A3.1: Lending Products, Project/Program Name 2017 Firm Electricity System Strengthening and Sustainability Program 2017 Standby Dili International Port Project Sector Poverty Targeting Strategic Agendas and Drivers of Change ENE TI-G IEG, ESG, GEM, KNS, PSD, PAR TRS GI IEG, RCI, PAR, PSD Division Year of PPTA/ PDA Total MOL COL Cost ($ million) ADB a ADF Grants Total Gov t Cofinance PATE TBD TBD PATE TBD TBD Total Firm MFF Urban Services Strengthening (Tranche 1) 2018 Standby Road Network Management and Upgrading WUS TI-M IEG, GEM, KNS, PSD TRA TI-G IEG, ESG, PSD, GEM, GCD PAUS TBD TBD PATE TBD TBD Total ADB = Asian Development Bank, ADF = Asian Development Fund, COL = concessional ordinary capital resources lending, ENE = energy, ESG = environmentally sustainable growth, GCD = governance and capacity development, GI = general intervention, Gov t = government, IEG = inclusive economic growth, KNS = knowledge solutions, MOL = market-based ordinary capital resources lending, OCR = ordinary capital resources, PAR = partnerships, PATE = Pacific Transport, Energy and Natural Resources Division, PAUS = Pacific Urban, Social Development and Public Management Division, PDA = project design advance, PPTA = project preparatory technical assistance, PSD = private sector development, RCI = regional integration, TI-G = targeted intervention geographic dimensions of inclusive growth, TI-M = targeted intervention Millennium Development Goals, TRA = transport, WUS = water supply and other urban infrastructure and services.

10 Appendix 3 7 a Reflecting the approved combination of ADF lending operations with the OCR balance sheet that will become effective on 1 January For 2016, COL and MOL should be understood to mean ADF lending and OCR lending. b Additional MOL financing will be sought If the anticipated cofinancing is not available. Source: Asian Development Bank estimates

11 8 Appendix 3 Table A3.2: Nonlending Products and Services, Sources of Funding ADB Others Assistance Name Sector Division Assistance Type Source Amount ($'000) Source Amount ($'000) Total ($'000) 2017 Preparing the Road Network Management and Upgrading Project TRA PATE PPTA TASF 1, ,000.0 Skills Development Project EDU PAUS CDTA TF 2, ,000.0 Total 1, , , Capacity for Regional Economic Integration II PSM TLRM CDTA TASF Inclusive Finance for Poverty Reduction FIN PLCO PATA JFPR Total ,500.0 ADB = Asian Development Bank. CDTA = capacity development technical assistance, EDU = education, FIN = finance, JFPR = Japan Fund for Poverty Reduction, PATE = Pacific Transport, Energy and Natural Resources Division, PAUS = Pacific Urban, Social Development, and Public Management Division, PPTA = project preparatory technical assistance, PSM = public sector management, TRA = transport, WUS = water and other urban infrastructure and services, TASF = Technical Assistance Special Fund, TF = Trust Fund, TLRM = Timor-Leste Resident Mission. Source: Asian Development Bank estimates.

12 9 Appendix 4 ASSISTANCE PROGRAM FOR CURRENT YEAR Table A4.1: Lending Products, 2016 Project/Program Name Sector Poverty Targeting Strategic Agendas and Drivers of Change Division Year of PPTA/ PDA Total OCR Cost ($ million) ADB ADF Loans Grants Total Gov t Cofinance Firm Urban Services Improvement Sector Project Road Network Upgrading Project (additional financing) WUS TI-M IEG,GEM, KNS, PSD TRA TI-G IEG, ESG, PSD, GEM, GCD PAUS TBD TBD PATE TBD Total ADB = Asian Development Bank, ADF = Asian Development Fund, ESG = environmentally sustainable growth, GEM = gender equity and mainstreaming, GCD = governance and capacity development, Gov t = government, IEG = inclusive economic growth, KNS = knowledge solutions, OCR = ordinary capital resources, PAUS = Pacific Urban, Social Development, and Public Management Division, PDA = project design advance, PPTA = project preparatory technical assistance, PSD = private sector development, TI- G = targeted intervention growth, TI-M = targeted intervention Millennium Development Goals, WUS = water and other urban infrastructure and services. Source: Asian Development Bank estimates.

13 10 Appendix 4 Table A4.2: Nonlending Products and Services, 2016 Sources of Funding ADB Others Assistance Name Sector Division Assistance Type Source Amount ($'000) Source Amount ($'000) Total ($'000) Firm Preparing the Electricity System Strengthening ENE PATE PPTA TF 1, ,000.0 and Sustainability Program Fiscal policy for improved service delivery PSM TLRM CDTA TASF Capacity for Regional Economic Integration PSM TLRM CDTA TASF RCIF ,000.0 Standby Strengthening Infrastructure Services, Governance, and Safeguards MUL PATE CDTA TF 1, ,000.0 Total 3, ,750.0 ADB = Asian Development Bank. CDTA = capacity development technical assistance, EDU = education, ENE = energy, PATA = policy and advisory technical assistance, PATE = Pacific Transport and Energy Division, PAUS = Pacific Urban and Social Division, PPTA = project preparatory technical assistance, PSM = public sector management RCIF = regional cooperation and integration fund, TASF = Technical Assistance Special Fund, TF = Trust Fund, TLRM = Timor-Leste Resident Mission. Source: Asian Development Bank estimates.

14 Appendix 5 11 LIST OF INDICATIVE KNOWLEDGE PUBLICATIONS AND EVENTS Table A5.1: Knowledge Publications and Events for 2017 Title of Publication or Event Subject Type Department or Sector Group or Thematic Group Asian Development Outlook, 2017 Economics Publication ERCD Asian Development Outlook Update, 2017 Economics Publication ERCD Pacific Economic Monitor, vol. 1, 2017 Economics Publication PARD Pacific Economic Monitor, vol. 2, 2017 Economics Publication PARD Pacific Economic Monitor Addendum, vol.1, 2017 Economics Publication PARD Pacific Economic Monitor Addendum, vol.2, 2017 Economics Publication PARD Technical Assistance Total number of publications = 6 Total number of events = 0 ACIA = ASEAN Comprehensive Investment Agreement, ADB = Asian Development Bank, ASEAN = Association of Southeast Asian Nations, WTO = World Trade Organization Source: Asian Development Bank estimates

15 12 Appendix 5 Table A5.2: Additional Knowledge Publications and Events Delivered in 2016 Title of Publication or Event Subject Type Department or Sector Group or Thematic Group Economic Implications of Timor-Leste s ASEAN Accession RCI Publication PARD TA-8256 Should Timor-Leste join the WTO? Economics Publication PARD TA-8256 Growing an industry options and recommendations for Timor- Private sector Publication PARD NA Leste s coffee industry development Coffee Industry Stakeholder workshop Private sector Event PARD NA development Law and Policy of the ASEAN Economic Community RCI Event PARD TA-8256 Civil society and the ASEAN People s forum RCI Event PARD TA-8256 Leveraging the ASEAN Economic Community lessons from Lao RCI Event PARD TA-8256 PDR Improving road safety in Timor-Leste Transport Event PARD Second District Capitals Water and Sanitation Investment Master Water and Urban Publication PARD TA-8064 Plans reports produced; and launch of the reports Services Timor-Leste water sector video Water and Urban Publication PARD TA-8750 Services Reforming Timor-Leste's water sector Water and Urban Publication PARD NA Services Dili Metropolitan Area Water Supply Investment Master Plan Water and Urban Event PARD NA workshop Services Solid waste management stakeholder working group consultation, Water and Urban Event PARD NA and presentation of ADB Dili SWM Improvement Strategy Services Technical Assistance Total number of publications = 6 Total number of events = 7 ADB = Asian Development Bank, AEC = ASEAN Economic Community, ASEAN = Association of Southeast Asian Nations, RCI = regional cooperation and integration, SWM = solid waste management, WTO = world trade organization, Note: Publications may include databases, multimedia, and other forms of documentation. Events may include event organization and training or capacity development. The table includes additional knowledge publications and events delivered outside the list of indicative knowledge publications and events included in the country operations business plan. Source: Asian Development Bank

16 Appendix 5 13 Table A5.3: Innovation, Advanced Technology, and Pilot Initiatives to be Implemented in 2017 Item Total number of innovation, advanced technology, and pilot initiatives = 0 Source: Asian Development Bank Nature Project Number Sector or Theme Division