Integrated National Financing Framework (INFF) and Financial Diversification in Timor-Leste

Project background

The current development finance landscape in Timor-Leste is dominated by domestic public financing via petroleum and gas revenues. Substantial fiscal and economic reforms are urgently needed to slow down the rapid depletion of the Petroleum Fund. Although many reforms are currently being undertaken, many are on a sectoral and piecemeal basis. Integrated National Financing Framework and Financial Diversification in Timor-Leste offers the opportunity to bring all these pieces together and establish a strategic framework that would outline policy options across different SDG related areas.

In 2019, Timor-Leste expressed its commitment during the UN General Assembly to become one of the 15 pioneer countries to establish and implement an Integrated National Financing Framework (INFF). INFF is a Joint Programme (JP) to support the Government of Timor-Leste to align, identify, and leverage additional finance for its sustainable development objectives. It seeks to achieve this through growing the fiscal space, increasing the domestic and international private and public sector investments, and increasing the planning and budgeting aligned with the SDGs and the national Sustainable Development Plan. INFF will also help improve the governance and coordination, articulate a financing strategy, and strengthen the monitoring and oversight framework. This will create the systematic change needed to support the mobilization of additional financial resources.

Under the overall integrated financing framework, financing reforms in health, diaspora, and climate financing will be developed. These three areas will channel SDG investments into three development pillars of People (health), Planet (climate), and Prosperity (diaspora). In addition to developing the overall INFF framework, UNDP will be developing climate financing.

As a Small Island Developing State (SIDS), Timor-Leste is highly vulnerable to climate-change driven disasters. Climate financing is needed to mobilize investments in the planet through additional financing sources. The Government needs to be better equipped with capacities to proactively benefit from climate financing already available to SIDS. The private sector and financial institutions need knowledge and skills to develop low-carbon products and services, and to deliberately prioritize ‘green’ and ‘blue’ investments.  The climate financing component of INFF is exploring this in great detail to maximize the net benefit to society, economy, and planet.

The JP will be implemented by three UN agencies (UNDP, IOM, and WHO) in partnership with government agencies. A range of stakeholders from the private sector such as Chamber of Commerce and Industry Timor-Leste (CCI-TL), financial institutions (including the Central Bank of Timor-Leste), development partners, Civil Society Organizations (CSOs), community groups and the local governments will be engaged in the INFF process. The integrated and holistic INFF approach will be an important input into the coherent response of the Government and United Nations system in achieving SDGs.

Project Activities

  • Develop new INFF policies and initiatives that contribute to a holistic and integrated system of financing
  • Developing a integrated financial strategy to bring together policies, instruments, and partnerships to govern public and private finance
  • Assist the Government of Timor-Leste to establish effective measurement and monitoring frameworks for integrated financing
  • Develop a climate finance roadmap with feasible options
  • Assessment of climate financing capacity, budgeting, and investments in sectoral / sub-sectoral plans
  • Exploring feasible financing models, with at least one developed into a viable program pilot

Project Result

  • Increased public investments mobilized within SDG-aligned programs
  • A solid multi-sectoral governance and coordination structures to implement the INFF is established, including an INFF Oversight Secretariat
  • An integrated financing strategy will be articulated bringing together the policies, instruments and partnerships used to govern public and private finance
  • An INFF Roadmap will be articulated to prioritize the subsequent steps to be taken, including priority financing reforms
  • Climate finance capacity assessment, budget review, and road map is prepared
  • Scalable sectoral climate financing mechanisms to channel investments into sectoral development plans are developed
  • Innovative and scalable climate financing programs developed and climate change project piloted to leverage public and private sector resources into SDG implementation

Main partners

  • Government of Timor-Leste
  • Ministry of Finance/UPMA

Contact information

 

Project address

UNDP Timor-Leste

UN House, Caicoli Street (Obrigado Barracks) P.O. Box No. 008, Dili, Timor-Leste

Contact person

Firuz Shukurov ( Country Economist)/ Firuz.shukurov@undp.org

Status:

Ongoing

Project start date:

July 2020

Estimated end date:

June 2022

Focus area:

  • eradicate poverty in all its forms and dimensions
  • Project office:

    UNDP in Timor-Leste

    Implementing partner:

    United Nations Development Programme

    Full project information  

    Funding Support by

    Donor name

  • Mptfo - Joint Sdg Fund (previously Known As The Joint Fund For The 2030 Agenda)
  • United Nations Development Pro
  • Amount contributed

    $437,405

    Delivery in previous fiscal year

    2021 $218,115

    2020 $20,850

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