Résumé

Timor-Leste adopted the National Social Protection Strategy (ENPS) 2021–2030 with the ambition of ensuring income security and access to essential services for all, aligning with ILO recommendations and the Agenda 2030, reinforcing political commitment by increasing pensions and the Bolsa da Mãe conditional cash transfer. However, coverage remains limited (27% of the population in 2024), and public expenditure, at 11.4% of non-oil GDP (6.7% excluding veterans), is concentrated in non-contributory programs. The expansion of the contributory system is hindered by the large informal economy. To achieve universal coverage, an estimated 10.1% of non-oil GDP would be required, resulting in a funding gap of 3.7–9.3% of non-oil GDP in 2026, depending on the ambition of reforms. Long-term sustainability requires a combination of strategies, focusing on mobilizing domestic resources through strengthened tax collection, broadening the tax base, and expanding contributory revenues.

This policy paper was prepared by Rita Fernandes (Social Protection Expert, ILO–ACTION/Portugal in Timor-Leste), Gabriela Pedetti (ILO Consultant), Nanya Sudhir (ILO Technical Officer, Social Protection), Umberto Cattaneo (Public Finance Specialist), and Andrea Visentin (Junior Technical Officer, Social Protection). It has also benefited from the
valuable inputs of Mariana Pereira (ILO Technical Officer, Social Protection Data) and Nuno Castro (Coordinator of ACTION/Portugal, ILO).
This paper was funded by the Portuguese Ministry of Labour, Solidarity and Social Security under the ACTION/Portugal project “Strengthening Social Protection Systems in the PALOP and Timor-Leste”. The views expressed are those of the authors alone and do not necessarily reflect the position of the Government of Portugal.