DILI, 01 April 2026 (TATOLI) — The Council of Ministers has approved a draft Decree-Law to dissolve the Millennium Challenge Account – Timor-Leste, IP, following the termination of a key cooperation agreement with the United States.
The decision was made during a meeting of the Council of Ministers at the Government Palace in Dili, based on a proposal presented by Vice-Minister of Finance Regina de Jesus.
“Following the decision by the Government of the United States of America to terminate the Compact Agreement—which provided for a cooperation program in the areas of water, sanitation, and drainage, as well as education—this Decree-Law establishes the dissolution of this entity, which was created to ensure the implementation of the aforementioned program,” Government said in a statement.
The Decree-Law outlines a structured winding-down process that includes settling financial obligations, managing and disposing of assets, and returning unused funds to the Treasury.
It also mandates that the Ministry of Finance prepare reports on remaining activities and resources and retain programme data for five years.
Last month, the Millennium Challenge Account–Timor-Leste (MCA-TL) returned US$10,999,910 to the Timor-Leste Ministry of Finance plus US$286,188.06 in accumulated interest on March 23, 2026, in advance of the closure of the Timor-Leste Compact.
On December 30, 2024, the Government of Timor-Leste placed US$11 million into an MCA-TL-controlled account as part of the government’s contribution to the Timor-Leste Compact.
The contribution was intended to fund activities under the compact’s Water, Sanitation and Drainage Project. Since that deposit, bank fees have been the only funds deducted from the account containing the government contribution.
“Accumulated interest from that account in the amount of US$286,188.06 was held in a separate permitted account and has now been returned to the Ministry of Finance in addition to the government’s contribution,” said in a statement.
The U.S. Millennium Challenge Corporation (MCC) signed a compact with Timor-Leste in July 2022.
Although Timor-Leste had already invested millions in land acquisition and pre-construction preparations, in August 2025, the MCC Board of Directors convened and voted to terminate 13 compact and threshold programs as part of a strategic recalibration, scaling back programs globally. The Timor-Leste Compact was among those programs.
Following the notification that the compact would not move forward, MCC and MCA–Timor-Leste have worked to ensure a responsible and orderly closure of all compact activities. The return of the Government of Timor-Leste’s country contribution is the latest step in that process prior to the Compact Closure Date on April 20, 2026.
Journalist: Camilio de Sousa
Editor: Filomeno Martins
