RDTL mid-year budget doubled!

For further information and analysis, as well as links to many
documents in various languages, see

RDTL doubles budget in mid-year

From La’o Hamutuk, 29 June 2008

On 18 June 2008, the Timor-Leste Council of Ministers passed a 122%
increase in the State Budget for 2008 and sent it to Parliament for
approval. This massive increase, using a mid-year “rectification”
process which is usually intended for minor adjustments, incorporates
hasty major policy initiatives and goes against the process of managing
petroleum revenues sustainably which was enacted into law in 2005. The
Government held no public discussion or consultation on this budget; it
was a closely guarded secret until Parliament received it on 23 June.

In December 2007, the Government and Parliament enacted a State Budget
for 2008 of $347.8 million, to be funded by withdrawing $294 million
from the Petroleum Fund. The proposed “rectificaton” more than doubles
this, spending $773.3 during 2008, of which $686.8 million will come
from the Petroleum Fund.

To pay for the $425.6 million in additional disbursements, the
Government has re-estimated the Sustainable Income (ESI) from the
Petroleum Fund to be $396.1 million, 35% more than the $294 million
calculated six months ago. But the Government wants to spend more, so
they propose to go above the revised ESI by an additional $290.7
million. This is rationalized by high oil revenues — the kind of
thinking which leads countries into the “resource curse” trap, and
which the Petroleum Fund is intended to protect against.

The budget increase includes a new $240 million Economic Stabilisation
Fund to subsidize food, fuel and construction materials, as well as the
first payments for a heavy oil power plant and electric distribution
system budgeted at $390 million to be paid from 2008 to 2011.

During the first quarter of 2008, the Government spent only $32.4
million, executing less than 10% of what they had budgeted for the
year, and by mid-June, they had spent around $80.2 million. None of the
$294 million already authorized for 2008 has been withdrawn from the
Petroleum Fund; Government operations have been paid out of unexpended
cash from previous years.

La’o Hamutuk is publishing information on the Budget as we receive it,
so that Timorese citizens and others to inform themselves about these
critical issues.

Mid-Year Budget Document (English) 27 June 2008 (1.3MB) (Also first
chapters in Portuguese) Letter to Parliament from Prime Minister Xanana
Gusmão explaining motives for the mid-year budget increase, 23 June
2008 (Portuguese) Summary of proposed mid-year additions to the budget
Finance Ministry Press Release 25 June 2008 ( Tetum Portuguese)

RDTL Budget for 2008, approved 31 December 2007. Book 1 (1.4MB) Book 2
(1.6MB) Tax Reform Law (many documents)
Budget Execution Report for July-December 2007
Budget Execution Report for January-March 2008 (4.8 MB)
Information on balances, receipts and expenditures in Timor-Leste’s
Petroleum Fund Contents of
http://www.laohamutuk.org/econ/MYBU08/RDTLMYBU08.htm excerpted from the
Mid-Year Budget Document The entire Budget Document (in English) is at

Executive summary
Fiscal overview
Economic overview
Petroleum fund
Budget execution
Revision of the 2008 budget – the Government’s priorities
Economic Stabilisation Fund
Multi-year capital projects

Charles Scheiner
La’o Hamutuk (The Timor-Leste Institute for Development Monitoring and
Analysis) P.O. Box 340, Dili, Timor-Leste (East Timor)
Telephone: +670-3325013 or +670-734-0965 mobile
email: cscheiner@igc.org website: http://www.laohamutuk.org skype:


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