ADB's Work in Timor-Leste

Economic growth in Timor-Leste gathered momentum in 2022 with a planned rise in government spending, after the resurgence of the coronavirus disease (COVID-19) pandemic and historic floods in 2021. Inflationary pressures have been high with the increase in global food and fuel prices. The prudent and effective use of petroleum revenues to finance investments in human capital, physical infrastructure, and institutions is essential for sustainable growth. ADB has been supporting Timor-Leste since 1999 with a focus on removing infrastructure bottlenecks and institutional constraints to open the way for more sustainable development. ADB’s expanded portfolio is now supporting the government’s efforts toward economic diversification

ADB and the Government of Timor-Leste signed a $127-million loan in 2022 to help provide safe and reliable water in the capital city, Dili, home to two-thirds of the country’s population. The project will aid the development of climate-resilient infrastructure for water treatment and the creation of a new water network to bring potable water to 36,200 households and commercial establishments. It will also support the key functional operations of the state-owned water services utility, Bee Timor-Leste.

To date, ADB has committed 79 public sector loans, grants, and technical assistance totaling $751.5 million to Timor-Leste. Cumulative loan and grant disbursements to Timor-Leste amount to $269.28 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Timor-Leste includes 14 loans and 1 grant worth $575.5 million.

Historically, ADB’s portfolio focused on transport projects, with the majority concentrated on the rehabilitation or upgrading of national roads to improve linkages within the country. In 2021, ADB signed a $135-million loan for the expansion of Dili’s Presidente Nicolau Lobato International Airport to improve international connectivity and boost trade and tourism. ADB then diversified its loan portfolio in 2021 with its first energy and water and urban services projects. A $47-million loan will bring reliable water services to 62,000 people in the municipal capitals of Lospalos, Viqueque, and Same. A $35-million loan will modernize the power distribution system and enhance access to reliable electricity. The active portfolio also comprises four road projects to rehabilitate or upgrade 337 kilometers of national roads.

ADB is a leading partner for regional cooperation in supporting Timor-Leste’s accession to the Association of Southeast Asian Nations and for membership to the World Trade Organization. ADB is also helping strengthen governance and public financial management in the country. Technical assistance has also been provided across several areas including promoting agriculture livelihoods in coffee and agroforestry, developing gender-responsive judicial systems, and assisting in emergency flood and COVID-19 responses.

Operational challenges. The capacity to design and implement large projects in Timor-Leste 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. ADB is providing capacity building support for infrastructure management and public–private partnerships.

The Coffee and Agroforestry Livelihood Improvement Project conducted the nursery training activities for the field coordinators and the agriculture extension officers at village level. The plant seedlings took place in Suco Deudet, Bobonaro Municipality. Black soil was sieved and prepared to fill-in into the polybag. Photo: ADB

Knowledge Work

ADB has supported capacity development across several of its projects through training and embedded support within the government and other state entities. Knowledge work has been supported on topics such as the analysis of tax capacity, with a focus on the adoption of value added tax for public financial management reforms; e-business registration for private sector development; and food security.

ADB also regularly meets with nongovernment organizations and other donors to share information on projects and knowledge work. ADB has been collaborating with various bilateral and multilateral agencies including the Australian federal government’s Department of Foreign Affairs and Trade, the European Union, the Japan International Cooperation Agency, and the World Bank in various infrastructure and finance-related projects.

  ADB Projects in Timor-Leste Project data sheets for loans, grants, TAs

Future Directions

ADB operations in Timor-Leste are guided by the country partnership strategy (CPS) for Timor-Leste, 2023–2027, approved in July 2022, which provides a strategy for economic recovery, inclusive development, and climate resilience. The new CPS is aligned to Timor-Leste’s Strategic Development Plan, 2011–2030, and 2020 Economic Recovery Plan, as well as ADB’s Strategy 2030.

The ADB program in Timor-Leste will continue to emphasize knowledge systems, innovation, and technical expertise to accompany traditional financial support. The CPS will continue to guide the development of climate-resilient infrastructure, while also supporting the government’s ongoing efforts to diversify and develop a sustainable, non-oil economy through improving the delivery of basic services and strengthening the country’s business environment. The CPS will also guide efforts to diversify into agriculture, education, private sector development, and information and communications technology, and it will continue to support regional cooperation and trade.