Photograph: Fundasaun Mahein (2022)
Recent public controversy surrounding the World Bank’s poverty estimates has reopened an important debate about Timor-Leste’s development trajectory and the condition of the state more broadly. In April 2026, a World Bank economic report estimated that 71.7% of Timor-Leste’s population lived below the international poverty line of US$4.20 per person per day, the benchmark the Bank applies to lower-middle-income countries. Despite being published several months ago, this figure recently attracted significant public attention and criticism. The debate subsequently became confused because different poverty measures were treated as though they were measuring the same thing. The World Bank has since clarified that the 71.7% figure was not a direct measurement of poverty in 2026, but a modelled estimate projected forward from the 2014 Survey of Living Standards. It also notes that the US$4.20 international poverty line is designed primarily for international comparison, while Timor-Leste’s national poverty line is more appropriate for domestic policymaking.
The Government has responded by presenting preliminary results of the Summary Report on Poverty in Timor-Leste, drawing from the 2024 Timor-Leste Living Standards Survey, according to which poverty measured against the national poverty line declined from 41.8% in 2014 to 37% in 2024. The same results indicate a major rural-urban divide, with poverty affecting 45.5% of the rural population compared with 18.4% in urban areas. These figures derive from a new household survey conducted by the National Institute of Statistics, and the Government has announced that INETL and the Ministry of Finance will work with the World Bank on a broader Poverty and Equity Assessment using the same dataset.
Nevertheless, the reactions of both the Government and broader public to the World Bank estimate raise a broader issue about public debate on policy issues in Timor-Leste. It is legitimate to challenge an international organisation’s methodology, particularly where old data and modelling assumptions may fail to capture important changes in household welfare. Indeed, a recent analysis by a former government minister correctly emphasises that poverty figures must distinguish between survey data, modelled estimates and forecasts, and that international institutions share responsibility for communicating these distinctions clearly. At the same time, national authorities strengthen their credibility when they respond to uncomfortable findings through transparent evidence rather than with defensiveness. The correct response to an inaccurate or misleading statistic is therefore not to reject outside criticism because it comes from an international agency, but to publish better national data, permit independent scrutiny and demonstrate where the external estimate is wrong.
This is important because the poverty debate is ultimately much bigger than the difference between 37%, 44% or 71.7%. Even if the new household survey demonstrates that poverty has declined more substantially than World Bank projections suggested, the underlying development problem remains serious. A national poverty rate of 37% after more than two decades of independence and exceptionally high levels of public expenditure is not a minor challenge, particularly when almost half of the rural population remains below the national poverty line.
At the same time, it would also be unfair to ignore the extraordinary starting point from which Timor-Leste began. The country has emerged from Portuguese colonialism, 24 years of occupation and war, the destruction in 1999 and the subsequent 2006 crisis. It had limited infrastructure, human capital and experience of operating a modern sovereign state. Judged against this historical context, the achievement of sustained peace, democratic elections, national institutions and significant improvements in basic infrastructure should not be dismissed. Given these constraints, it might be argued that Timor-Leste has already achieved approximately as much poverty reduction and socio-political stability as could reasonably have been expected during its first two decades of independence. In this view, then, the more relevant question is not whether the current situation represents ‘success’ or ‘failure’; rather, it is whether the political settlement that produced this stability can be sustained over the next twenty years and beyond.
Timor-Leste’s post-independence political settlement has been relatively successful at preventing a return to major violent conflict and accommodating competing elite interests, largely by means of redistribution of petroleum revenues through public contracts, employment and subsidies. But it has been much less successful at generating a productive economy capable of creating large numbers of jobs, reducing dependence on petroleum wealth and building a broad domestic tax base. The importance of taxation for the development state capacity, in particular, is widely recognised as an essential element of ensuring sustained transitions away from fragility and conflict. Public spending financed through the Petroleum Fund has supported consumption, infrastructure, social transfers and political stability, but the domestic productive base remains narrow and heavily dependent on imports, while domestic revenues not linked to state spending remain a small component of overall public finances.
In this context, it is important not to treat Timor-Leste’s institutional weaknesses simply as the consequence of domestic political failure. In addition to historical legacies of marginalisation, exploitation and conflict, international actors also played a major role in shaping the post-independence state. Statebuilding interventions frequently focused on formal institutions, laws, administrative systems and imported models of governance without adequately understanding how these would interact with Timor-Leste’s political settlement, resistance-era authority structures and agrarian political economy. Nonetheless, the 2006 crisis notwithstanding, the post-independence state institutions have demonstrated remarkable resilience despite valid criticisms of the international statebuilding process.
FM has repeatedly argued that institutions do not operate in isolation from politics and the broader society in which authority is contested and legitimised. Formal rules may exist on paper while important decisions continue to be made through personal relationships, informal negotiation and elite agreements. In Timor-Leste, political legitimacy and state authority are more often conferred through informal structures such as personal prestige, resistance histories and clan loyalties than official positions and structures. These patterns have deep historical roots, including in clandestine and guerrilla resistance practices, as well as in historically-rooted Timorese social structures and traditional practices.
The development consequences of this political system are increasingly visible. The Government’s decision to suspend most recruitment into the civil service reflects a genuine fiscal and administrative problem: the public sector cannot continue expanding indefinitely, particularly where recruitment has not always been based on clearly identified institutional needs or rigorous merit-based processes. Yet from the perspective of young Timorese, this removes one of the few relatively secure pathways into formal employment at precisely the moment when the private sector remains unable to absorb large numbers of new entrants. The resulting pressure is visible in growing interest in overseas employment, particularly in Australia, South Korea, the United Kingdom and elsewhere. Labour migration can provide important income, skills and remittances, but it should not become a substitute for domestic economic transformation. If the most realistic aspiration of educated young Timorese is to leave the country, the current labour market issue also becomes a long-term question of national resilience.
The same uncertainty applies to Greater Sunrise, a project which has occupied a central place in political narratives about Timor-Leste’s future economic development for many years. The expected timetable for Greater Sunrise continues to extend into the future, with government statements now pointing toward production commencing only in the early 2030s. This means that the country must manage another prolonged period in which public expectations remain high while fiscal space becomes increasingly constrained. Greater Sunrise may eventually contribute significantly to the economy, and politicians may reasonably expect that it could fund the current model of state-led economic growth for years – or perhaps decades – to come. Nonetheless, Sunrise and other mineral resources cannot provide an adequate policy response to current problems of youth unemployment, low agricultural productivity, weak private sector development and dependence on imported goods. A development strategy built around waiting for another petroleum project therefore carries substantial political and fiscal risk.
The controversies around the Government’s program of evictions and demolitions of informal settlements provide another example of how economic development and state legitimacy are becoming increasingly interconnected. Land rights and urban development in Timor-Leste are highly fraught and complex due to a combination of socio-economic and historical factors. The country has experienced rapid urbanisation in recent years with large influxes of migrants from rural areas, while administration of land claims remains institutionally weak and historically complex due to large-scale displacement, multiple competing claims and inadequate records. Now, as significant numbers of people have faced eviction over the last two years, and evicted communities construct informal settlements on hillsides and peripheral land around Dili, future infrastructure development will increasingly bring the state into conflict with citizens over compensation and resettlement. If such disputes are handled primarily through coercive administrative action rather than transparent legal processes, development itself can become a source of insecurity. The policy issue is therefore not whether the Government should build airports, roads or other infrastructure, but whether development is implemented in a manner which strengthens rather than weakens public confidence in state institutions.
The recent emergence of scam centres and other forms of transnational organised crime raises even more serious questions about state resilience. Over several months in mid-2026, security institutions conducted a series of major operations against suspected cyber-fraud networks, resulting in the arrest of hundreds of people. FM and others have called for investigations to identify organisers, financiers, property owners, company structures, immigration facilitators and, where evidence exists, politically connected individuals or public officials who may have enabled criminal operations.
In the context of the current discussion, the lack of a visible investigation into allegations of high-level facilitation of serious crimes has significant implications for the state’s legitimacy, and in turn for national stability and resilience. First, it creates an impression domestically that politically connected actors operate according to different rules from ordinary citizens. Second, it undermines the confidence of international partners whose cooperation Timor-Leste increasingly requires in areas such as financial intelligence, cybercrime, immigration control and transnational policing.
These concerns are not limited to the scam centre issue – FM has long observed similar patterns of personalised interventions and disregard for formal procedures and rules within the justice, defence and policing sectors. Timor-Leste’s constitutional order depends on maintaining clear boundaries between political authority, prosecutorial discretion, judicial independence and police powers. Even where leaders intervene with the intention of solving immediate problems, repeated reliance on personal authority can gradually weaken institutional procedures by teaching officials that outcomes depend more on relationships with powerful individuals than on established rules.
This problem connects directly to FM’s longstanding discussion of “guerrilla politics”. Many of Timor-Leste’s senior leaders developed their political instincts and skills during clandestine struggle and armed resistance. Those conditions rewarded secrecy, loyalty, personal trust, command authority and informal negotiation. While such practices were rational – even essential – during occupation, the requirements of a modern constitutional state are fundamentally different. Contemporary governance depends on systems, not individuals. This requires the development of professional bureaucracies, institutional checks and balances, public records, merit-based recruitment and decisions that continue to function regardless of which individual occupies a particular office. In FM’s view, the central political challenge facing Timor-Leste is the transformation of practices developed under conditions of national liberation into institutional practices suited to a modern, democratic state.
This makes generational transition one of the most important questions facing Timor-Leste. While FM has sometimes lamented political elders’ lack of preparation and accommodation of the next generation, there are some positive signs. Within the defence sector, senior leaders increasingly recognise that younger officers must be identified, mentored and promoted so that command responsibility gradually shifts away from the resistance generation. FM has previously argued that professionalisation of F-FDTL requires precisely this type of transition, based increasingly on competence, education and professional performance rather than historical status. As younger Timorese who have grown up during peacetime, thereby benefiting from educational and professional experiences inaccessible to their elders, enter decision making positions, similar processes will eventually occur across politics, the civil service, justice institutions and state-owned enterprises. However, generational change by itself does not guarantee institutional reform – younger leaders entering a governance system structured around patronage, personal relationships and informal deals may simply learn to reproduce the same behaviour.
The recently published Matadalan Survey and Research Institute survey of potential presidential candidates provides a snapshot of public opinion in advance of the 2027 election. One potentially encouraging finding is that 67% of respondents said they would prefer a candidate from another political party if that individual possessed strong capacity, compared with 24% who prioritised a candidate from their own party and 9% who preferred an independent candidate with capacity and experience. These findings suggest that many respondents value competence and experience over partisan loyalty. From a governance perspective, this is potentially significant because the long-term institutionalisation of merit-based politics depends partly on citizens rewarding competence rather than simply historical legitimacy, party identity or patronage networks.
It is sometimes assumed that Timor-Leste’s political problems will resolve naturally when the resistance generation retires or passes away. However, this is far from guaranteed. Incentives within political systems are often self-perpetuating, while rule of law and impartial governance do not develop overnight. Moreover, many features of Timor-Leste’s politics and bureaucratic culture, such as a preference for informality and personal connections, are themselves shaped by fundamental Timorese social realities such as close-knit kinship ties and oral culture. In this sense, rather than being framed as a ‘problem’ to be eradicated, it may be more productive to view the predominance of informality and personalised approaches in official systems as a necessary stage in Timor-Leste’s state formation, but one that may be gradually displaced by more technocratic and rules-based systems, or possibly through direct constitutional reform.
As FM has stated previously, the debate about Timor-Leste’s future should move beyond individual controversies and ask more fundamental questions about the kind of state and economy national leaders are trying to build. What will Timorese social democracy look like in 2040 or 2050? What kind of private sector does Timor-Leste want to encourage, and what forms of investment should be considered most desirable (and undesirable)? What constitutional changes, if any, are needed to improve the democratic functioning of the state? Is the current state system, despite its flaws, still the ‘least worst’ given its constraints on executive power and protection of fundamental rights?
Timor-Leste remains politically stable, and its people have demonstrated remarkable resilience and democratic instincts. It would therefore be alarmist to suggest that the country is approaching collapse. However, fragility does not suggest only an immediate risk of conflict, but can be reflected in weakening institutional norms, declining confidence in public authority, increasing economic inequality and exclusion, corruption, criminality and growing dependence on informal solutions to formal governance problems.
Timor-Leste already has many laws, strategies, institutions and development plans. FM argues that policy makers should prioritise institutional consolidation across key areas, such as: strengthening statistical capacity and publishing reliable data; protecting judicial independence; professionalising recruitment and promotion; improving financial and criminal investigations; enforcing immigration and corporate regulation; strengthening land administration; expanding productive employment through investments in strategic sectors; and ensuring that major state decisions are made through transparent procedures which survive changes in political leadership.
Civil society, media and academia also bear significant responsibilities to analyse public policies to contribute to a healthy and constructive public debate. FM and other organisations should continue to identify corruption, institutional failures and poor policy choices, but criticism must remain evidence-based and should acknowledge the genuine difficulty of governing Timor-Leste. It is easy to recommend ideal policies from outside government; implementing them within a weak institutional capacity and complex political realities is far harder. However, recognising these constraints does not mean accepting avoidable failures. The role of independent civil society is precisely to point out where state practice diverges from constitutional principles, to propose realistic reforms and to ensure that uncomfortable questions remain part of public debate.
Timor-Leste has already achieved something historically significant: it has transformed a society emerging from violent occupation into a peaceful democratic state. The next phase may be more difficult because the challenge is no longer principally about achieving independence or preventing renewed conflict. It is about transforming a political settlement built around resistance legitimacy, petroleum revenues and personalised elite accommodation into a sustainable institutional order capable of functioning after the resistance generation and after petroleum wealth.
Timor-Leste therefore faces serious risks, but it also possesses considerable advantages: peace, democratic legitimacy, a young population, strategic geography and unusually broad international goodwill. Robust partnerships with ASEAN neighbours, Australia, Portugal and other international partners can generate real benefits through trade, investment, education, cultural exchange, labour mobility, security cooperation and technical assistance. The challenge is to ensure that these opportunities strengthen domestic institutions and productive capacity rather than substitute for them. If Timor-Leste can combine the resilience and political achievements of the independence generation with stronger institutions, new economic opportunities and the capabilities of a younger generation, FM believes that there is every reason to be confident in the country’s long-term future.
