East Timor's presidential candidate Francisco Lu Olo Guterres displays his ballot during the second round of presidential election Dili, East Timor April 16, 2012. REUTERS/Lirio Da Fonseca

East Timor is holding the presidential run-off elections Monday and more than 700,000 eligible voters are expected to cast their votes in 650 polling booths. Two former freedom fighters -Francisco Guterres and Taur Matan Ruak - are in a close race in the run-off.

President Jose Ramos-Horta was knocked out of the race in the first round of elections held last month. The Nobel laureate was placed third in the elections, in which Guterres garnered most votes.

Ramos-Horta has accepted his defeat and announced that he will hand over power to the winner on May 19 when his term ends. 

The role of president is ceremonial in East Timor, but it has gained attention recently as the country is in a transitional process.

The country has a turbulent past. It got independence in 2002 after a two-decade-long Indonesian rule, which witnessed bloody guerrilla war between the freedom fighters and the Indonesian military.  

East Timor was under the United Nations Transitional Administration for three years after the 1999 break-up that forced the Indonesian troops to withdraw from the country.  

Both the candidates facing the presidential run-off were part of the freedom struggle against the Indonesian occupation. Opposition Fretilin party leader Guterres, 57, was a commander of the guerrilla army during the Indonesian rule. Ruak , 55, who is running as an independent candidate, played a key role in the freedom struggle.

Elections to the parliament will be held July 7, following which the Australian led-UN peace keepers deployed in the country will be withdrawn, facilitating a total transfer of power to the young democracy.