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Timor-Leste and ADB

While helping Timor-Leste emerge stronger from the COVID-19 pandemic, the ADB country program will continue to emphasize knowledge, systems, innovation, and technical expertise to accompany traditional financial support.

ADB's Work in Timor-Leste

ADB Membership

Joined 2002

Shareholding and Voting Power

Number of shares held:
1,050 (0.010% of total shares)

Votes:
40,164 (0.302% of total membership, 0.464% of total regional membership)

Overall capital subscription:
$15.12 million

Paid-in capital subscription:
$0.76 million

Timor-Leste has made significant progress in state building since its independence in 2002. However, while access to essential services (particularly electricity) has vastly improved, key human development indicators remain low. The country’s prospects hinge on prudent and effective use of revenues from petroleum production to finance the investments in human capital, physical infrastructure, and institutions that are needed to support economic diversification and growth.

The Asian Development Bank (ADB) has been supporting Timor-Leste since 1999, with a focus on removing infrastructure bottlenecks and institutional constraints to open the way for a more sustainable economy. The bank’s assistance concentrates on improving transport connectivity to reduce inequalities, upgrading water supply and sanitation to deliver better health outcomes, regional cooperation and integration, investing in agricultural value chains to boost rural prosperity, and expanding financial and digital services to stimulate inclusive growth.

Port views in Timor-Leste's capital of Dili

The pipeline also addresses health and economic responses to the COVID–19 pandemic.

Since 1999, ADB has committed loans, grants (including cofinancing), and technical assistance worth $443.63 million for Timor-Leste.

Cumulative loan and grant disbursements to Timor-Leste amount to $233 million. These were financed by regular and concessional ordinary capital resources and the Asian Development Fund.


ADB-Supported Projects and Programs

ADB has financed five projects worth $271.7 million to help Timor-Leste rehabilitate or upgrade 218 kilometers of national roads, with a further 293 kilometers of roads to be upgraded by 2022. Additionally, the bank provided $1 million in technical assistance to strengthen transport policy and planning. A new area of support has been for air transport, with technical assistance of $225,000 to assess the upgrading of the runway at Nicolau Lobato International Airport in Dili.

ADB financing helped upgrade the municipal water systems in Manatuto and Pante Makassar, bringing piped clean water to 2,581 households, and the bank is helping pilot innovative models for operation and maintenance systems through an $11 million grant. ADB also financed technical assistance projects that helped prepare the upgrading of urban water and solid waste management in Dili, improve urban water and sanitation systems in four municipal capitals, and establish a state-owned enterprise for water management.

In education, ADB helped upgrade facilities and introduce mid-level skills training in Timor-Leste’s five accredited training centers that specialize in construction and automotive trades. The project and related technical assistance also contributed to the development of new curricula, teachers’ training modules, and policies for secondary education.

ADB helped establish the Timor-Leste Coffee Association and contributed to the National Coffee Sector Development Plan, 2019–2030. It is now supporting the implementation of the plan. New models for educating coffee-farming households on good agricultural practices, crop productivity and quality, and access to finance are supported by a $3 million grant from the Japan Fund for Poverty Reduction and through ADB’s first nonsovereign investment in Timor-Leste.

District Capitals Water Supply Project aims to improve the supply of safe drinking water to more people

ADB also supported key reforms to strengthen financial services in the country. Cofinanced by the Government of Australia, a technical assistance of $1.1 million was instrumental in transforming the Institute of Microfinance of Timor-Leste into the country’s first and only locally incorporated commercial bank—Banco Nacional de Comércio de Timor-Leste. ADB helped implement a new core banking technology platform and strengthen the commercial bank’s governance framework, creating an example of good corporate oversight to guide other state-owned enterprises.

Banco Nacional de Comércio de Timor-Leste (BNCTL) bank tellers attend to clients at their main bank branch in Dili

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020. An ongoing loan and technical assistance to expand Olam’s coffee operations has involved training 4,200 coffee farming households to improve the productivity and quality of their production.

Financing Partnerships

financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Timor-Leste in 2007. Since then, sovereign cofinancing commitments for Timor-Leste have amounted to $101.82 million for four investment projects and $15.08 million for eight technical assistance projects.

In 2020, Timor-Leste received $3 million grant cofinancing from the Japan Fund for Poverty Reduction for the Coffee and Agroforestry Livelihood Improvement Project.

A summary of projects with cofinancing from 1 January 2016 to 31 December 2020 is available at Timor-Leste: Cofinancing.

Operational Challenges

While the Government of Timor-Leste can draw on petroleum revenues to finance transformative investments, the capacity to design and implement large and complex projects is still developing. Project implementation faces systemic, institutional capacity, and coordination challenges. ADB is helping the government plan and implement high-quality investments and reforms, strengthen governmental processes, and develop national systems for public financial management and improved service delivery.

ADB is working closely with the government to ensure that systems are in place for the operation and maintenance of new infrastructure. Sound legal and institutional frameworks are needed to ensure sustainable operations and the bank is providing capacity building support for infrastructure management and the advancement of public–private partnerships.

Future Directions

ADB investments in Timor-Leste are prioritized in the enhanced country operations business plan, 2021–2023, which is aligned to the country’s Strategic Development Plan, 2011–2030.

While helping Timor-Leste emerge stronger from the COVID-19 pandemic, the ADB country program will continue to emphasize knowledge, systems, innovation, and technical expertise to accompany traditional financial support.

ADB’s operations will also support the government’s efforts to combat the socioeconomic impacts of the pandemic through its new Economic Recovery Plan to diversify and develop a sustainable non-oil economy by improving delivery of municipal services and strengthening the country’s business environment.

This article was originally published in the ADB and Timor-Leste: Fact Sheet. Updated yearly, this ADB Fact Sheet provides concise information on ADB's operations in the country and contact information.

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