Peace, Prosperity and Safety Nets in Timor-Leste: Competing Priorities or Complementary Investments?

Social protection cash transfers are a vital policy instrument in tackling poverty, and provide an affordable, broad-based foundation for inclusive growth and social stability. Yet, international experience has shown that many countries have too many programs, but with coverage gaps and fragmented benefits which leave significant proportions of the population without adequate poverty relief or improved economic security. Here, we examine the design and poverty impact of the primary cash transfer programs in the Democratic Republic of Timor-Leste using nationally representative survey data. We find that though Timor-Leste's level of social protection expenditure is high by international standards, the overall poverty impact is incommensurate with spending levels. This is explained by the proportion of expenditure devoted to transfers to veterans, the large proportion of the poor population which is not reached by the current targeting mechanisms, and the small coverage and benefit level of the only program that explicitly targets poor households.