Before Timor-Leste regained itsindependence on May 20, 2002, the transitionaladministration consulted with the East Timorese people ontheir aspirations for the future. Seven out of ten peoplecited education as their top national priority. The firstNational Development Plan made education a cornerstone ofits strategy to alleviate poverty and facilitate economicgrowth. This sector study on education is a response to theaspirations of the people of East Timor and to itsgovernment's priorities. The study provides analyticalsupport for medium-term policy options to expand coverage,raise internal efficiency and student achievement, andimprove sectoral and expenditure management.At the mostfundamental level, the government's target is to reachthe Millennium Development Goals of gender parity inenrollment by 2005 and universal enrollment in andcompletion of primary education by 2015. This study focusesmainly on primary education with little coverage of youth,the labor market, or tertiary education. The study begins bydiscussing the evolution of the education system and howhistorical legacies shape current conditions. It examinesthe barriers to access, efficiency, and quality as well asthe policies needed to remove them. It also discussesinstitutional issues and the medium-term public expenditureframework and assesses the options for improving sectoralmanagement and achieving financial sustainability.