On December 15th, 2025, the Government signed a financing agreement in Dili with the Asian Development Bank (ADB) for the rehabilitation of approximately 42 kilometres of the national road connecting Lospalos to Iliomar, in the municipality of Lautém, including the reconstruction of three bridges and the design of two more along the Baucau–Lautém route. 
The agreement was signed by the Minister of Finance, Santina José Rodrigues F. Viegas Cardoso, and the Director of the ADB in Timor-Leste, Stefania Dina, at a ceremony held in the Auditorium of the Ministry of Finance in Dili. The ceremony was attended by Minister of Public Works Samuel Marçal, Minister of Planning and Strategic Investment Gastão Francisco de Sousa, and the President of the Lautém Municipal Authority.
The financing package totals US$78 million, comprising a concessional loan of US$75 million and a grant of US$3 million. The project aims to enhance road connectivity between the east and south of the country, improve travel safety, and increase infrastructure resilience against floods, landslides, and other climate-related risks.
During the ceremony, the Minister of Finance stated that “the rehabilitation of the 42-kilometre road between Lospalos and Iliomar not only directly benefits the communities along the route, but also integrates into the north-south road corridor connecting Lospalos to Viqueque, contributing to the Government’s vision of a continuous national road network throughout the territory.” The minister also emphasised the importance of involving local authorities to ensure the successful implementation of the project, particularly in managing social and environmental issues.
The $3 million grant is funded through the ADB’s Community Resilience Partnership Programme, with support from the French Development Agency, the Nordic Development Fund, the UK Government, and the Green Climate Fund. This support will enable communities in villages (sucos) located along the route to design and implement small-scale climate adaptation interventions.
The project integrates nature-based solutions with conventional engineering, including improvements to drainage systems, reinforcement of embankments, pavements adapted to natural hazards, and slope stabilization through bioengineering. Interventions are also planned for the Seical, Borouai, and Malailada bridges to reduce problems caused by flooding.
ADB Director in Timor-Leste Stefania Dina stated that “strengthening community resilience is essential to protect lives and livelihoods in the face of disasters and extreme weather events,” adding that the project will enable local communities to lead sustainable and adaptive solutions for the protection of critical infrastructure.
The loan agreement was previously authorised by the Council of Ministers at its meeting on December 10th, 2025 and is part of the efforts of the 9th Constitutional Government to enhance national connectivity, support local economic development, and promote resilient and sustainable infrastructure across the country.