18 December 2012

2013 State Budget moves toward sanity

This week, Timor-Leste’s Government will send its proposed General State Budget for 2013 to Parliament for approval. La’o Hamutuk appreciates that Timor-Leste will no longer have the second-fastest-growing state budget in the world. The appropriations in the new budget are more consistent with Timor-Leste’s limited oil and gas reserves. As we await the Budget Books which will contains the details, we examine the overall picture.

The Government issued a press release yesterday, summarizing the Council of Ministers meeting which approved the proposed 2013 Budget, which appropriates $1,798 million, as follows:
  • $160.3 million for Salaries and Wages
  • $461.7 million for Goods and Services
    (including $42.4 million through the Human Capital Development Fund, $8.5 million of which is carried over from 2012)
  • $236.5 million for Public Transfers
  • $  47.2 million for Minor Capital
  • $891.9 million for Development Capital
    (including $752.9 million through the Infrastructure Fund, $444.4 million of which is carried over from 2012).
New appropriations and loans add up to $1.34 million, a significant and welcome moderation of rapid budget escalation.

The above graph shows that the total size of the 2013 budget will be $1.8 billion, about the same as the final rectified 2012 budget. Executed expenditures during 2012 will probably be less than $1.4 billion, so 2013 is still a significant increase in spending.

The biggest change is on the revenue side. Instead of withdrawing $1.5 billion from the Petroleum Fund as was done in 2012, the 2013 budget will withdraw only $1.2 billion. This is 4.6% of Timor-Leste's anticipated petroleum wealth, and is still more than the 3% Estimated Sustainable Income, although it is less unsustainable than the 6.7% the Government withdrew from the Petroleum Fund during 2012. La'o Hamutuk appreciates this move in the direction of fiscal responsibility, and we hope it will continue.

The remainder of the non-oil "budget gap" will be filled with $453 million carried over from unspent money in the Infrastructure and Human Capital Development Funds at the end of 2012. The Infrastructure Fund began operation in 2011 and had $132 million left at the end of that year, which was carried over to  2012. During 2012, the Government appropriated $707 million more for the Fund to finance ambitious, multi-year, mega-projects. However, only about 14% of the non-electricity Infrastructure Fund allocations for 2012 had been spent by mid-December, with another 25% committed.

On the expenditure side of the 2013 State Budget, salaries and purchases of goods and services will go up significantly compared with 2012. Public transfers (pensions, veterans' benefits, etc.) were recently increased in the October budget rectification and will continue at this higher level. Capital expenditure will get smaller, perhaps in recognition that some of the most unrealistic proposed projects will not benefit Timor-Leste or are impossible to implement on ambitious schedules.

Note: This blog entry, including the first graph, was revised on 19 December to reflect information in the budget books, which we posted on La'o Hamutuk's web page on the 2013 budget on 2 January. We will continue to provide updates, analysis and documents on that page.  
The first graph shows the Government's figure for Timor-Leste's non-oil GDP as a green line with squares.  From 2009 on, the Government and IMF have revised the method by which this is calculated, and it is not comparable with values before 2009.

08 December 2012

Perceiving corruption accurately

Click here for the Transparency International and MCC scores published in late 2013.

Transparency International just reported that Timor-Leste moved up 30 places in their annual Corruption Perceptions Index, the biggest climb up the index of any country in the world. Last month, Timor-Leste’s ranking dropped seven places on the U.S. Government’s Millennium Challenge Corporation’s Control of Corruption indicator. Why are they so different? Is corruption here getting worse or better?

As a new, small country struggling to develop its state and economy, Timor-Leste pays a lot of attention to its ratings on international indicators, but these indicators are often misleading, ignoring unique characteristics of our extremely petroleum-export-dependent economy or misrepresenting the rapid changes Timor-Leste is going through.  We should understand these scorecards before we use them to shape policy, and we should give greater weight locally-produced, country-specific data (such as the Government’s not-yet-released Household Income and Expenditure Survey) to really know Timor-Leste’s situation.

Transparency International (TI) calculates a Corruption Perception Index (CPI) for nearly 200 countries every year and publishes them in early December. As with the MCC scorecard, the CPI uses data which is up to two years old, so the new scores represent the situation during 2010-2012.

In the new 2012 CPI, Timor-Leste scored 33 out of 100, ranking 113rd best out of 176 countries rated. In last year’s CPI, our score was worse, and we ranked 143rd out of 183 countries. Great news: Timor-Leste reduced corruption more than every other country in the world! But is it true? We  have a rapidly growing state budget, a minister facing prison, reports about corruption in the media every day and falling scores from other rating agencies. Published international perceptions should be consistent with the country itself.

La'o Hamutuk looked into how Transparency International calculated their figures. We learned that perceptions of corruption in Timor-Leste did not change significantly since last year, but our score got better for four reasons:
  1. Transparency International included seven fewer countries/territories in the 2012 CPI that had been included in 2011 – Macau, Samoa, Vanuatu, Kiribati, Tonga, Solomon Islands and Maldives – because not enough data was available.  All of these had scored better than Timor-Leste in 2011, so removing them automatically moved us up seven places – from 143 to 136.

  2. This year, TI has updated the methodology by which the calculate the CPI, and are using fewer data sources to construct the index overall (17 in 2011 and 13 in 2012). For Timor-Leste, TI used only three indicators for Timor-Leste, down from five last year. This year, they no longer included data from the Asian Development Bank, which had ranked Timor-Leste in a three-way tie for lowest score among 31 countries in 2011. Without the ADB indicator, our ranking automatically improved significantly.

  3. Many countries have corruption perceptions about the same as Timor-Leste, so a very small change in score can result in a large change in ranking. Last year, Timor-Leste was tied for rank 143 with nine countries, so that a tiny improvement would move us up nine ranks. This year, we are in a five-way tie for rank 113, and the score difference between rank 113 and rank 130 (about where we would be without the two prior methodology changes) is only 5 out of 100.

  4. The three indicators TI used this year for Timor-Leste are from the World Bank (Country Policy and Institutional Assessment score on “Transparency, Accountability and Corruption in the Public Sector”), the World Economic Forum (Executive Opinion Survey, two questions on corruption), and Global Insight (Country Risk Ratings). The World Bank publishes their data, and Timor-Leste’s score got slightly worse, from 3.0 to 2.5.  World Economic Forum scores are not published in detail, but Timor-Leste improved slightly, from 3.05 to 3.3. The difference – and almost all of the improvement -- is from the Global Insight score. Neither TI nor IHS (the company which produces Global Insight) would share raw data with La’o Hamutuk, but Timor-Leste apparently improved significantly.
In an email to La’o Hamutuk, Transparency International Research Manager Deborah Hardoon explained why Timor-Leste moved up in the rankings: “The improvement in rank number results from several aspects of comparing countries/territories on a relative index, where position is determined by the assessment of other countries as well as your own. Timor-Leste’s gain in rank comes from the combination of fewer countries this year, the decline of perceptions of corruption for other countries, fewer data sources used to construct Timor-Leste’s score and a small net increase of the raw underlying data sources. We would not say this was an ‘improvement’ per se, as one of three data sources moved in the opposite direction and the change in CPI score is less than the margin of error. Moreover, Timor-Leste still scores worse than nearly 2/3 of all countries – a score of 33 out of 100 clearly demonstrates that much remains to be done to clean up the public sector in Timor-Leste.”

Nevertheless, La’o Hamutuk joins others in appreciating that some international agencies perceive that corruption here is declining compared with other countries. In this year’s CPI ranking, Timor-Leste did better than 19 countries which had scored better than us last year (Dominican Republic, Ecuador, Egypt, Indonesia, Madagascar, Mozambique, Sierra Leone, Vietnam, Lebanon, Nicaragua, Guyana, Honduras, Iran, Kazakhstan, Pakistan, Bangladesh, Cameroon, Syria and Eritrea), many of whose scores fell drastically. Rather than celebrating, Timor-Leste should redouble our efforts to make this improvement significant and permanent.

Timor-Leste needs to do a lot more to reduce and prevent corruption in this country. Wishing and indicators won’t make it happen – and neither will speeches, dialogues and conferences alone.

28 November 2012

Transparency, over company protest

In 2010, Timor-Leste became the third country in the world to be certified as compliant by the Extractive Industries Transparency Initiative, which publishes reports from companies and governments detailing payments for oil, gas and mineral extraction.  Reports were published for 2008 and 2009 in four languages, available on paper and from Government and NGO web sites.

However, the process bogged down in 2010, and the reports for 2010 and 2011 have yet to be officially published. Under EITI rules, the 2010 report must be released before the end of 2012 to maintain Timor-Leste's compliant status.

EITI is run by "Multi-Stakeholder Groups" which include representatives from government, oil companies and civil society.  Timor-Leste's MSG has had a contentious year, and the companies have objected to a more detailed breakdown of reporting of their payments. Nevertheless, the draft reports for 2010 and 2011 were ready nearly two months ago, and were approved by most of the MSG on 26 November. Although the MSG usually makes decisions by consensus, the majority of its members decided to circulate the reports despite the companies' objections.  (See the update at the end of this blog for the final versions of these two reports, which were released in late December 2012.)

La'o Hamutuk has not been part of the MSG since 2009, but we continue to support initiatives to increase transparency of public finances and petroleum company operations, and publish relevant information on our EITI web page. Therefore, we are publishing preliminary versions of the EITI reports for 2010: ($2.15 billion total payments) and 2011: ($3.45 billion total payments).

For the first time, the EITI reports detail which companies paid penalties and interest for late payment of petroleum taxes, totalling $21 million in 2010 and $52 million in 2011.

The following is the Executive Summary of the preliminary Timor-Leste EITI Independent Reconciliation Report for 2011. The full report breaks down each company, revenue stream and discrepancy.

The Third (sic, actually Fourth) Timor-Leste Extractive Industries Transparency Initiative reconciliation covering the period from 1 January to 31 December 2011, was carried out by Moore Stephens in accordance with our Service Contract dated 30 April 2012 and as approved by the Multi-Stakeholder Working Group.

The assignment consisted of a detailed reconciliation of the payments made and declared by the Oil & Gas companies to revenue data provided by various entities and agencies of the Government of Timor-Leste.

The overall objective of the reconciliation exercise was to help the Government of Timor-Leste, and other relevant stakeholders, to determine the contribution that the Oil & Gas sector is making to the country’s economy and social development, and this to improve transparency and responsibility in the extractive resources sector.

Principal findings arising from reconciliation work
The main findings resulting from our work are as follows:

1. All oil companies and all Government Agencies have lodged their reporting templates for the 2011 reconciliation exercise. In total, 13 Oil & Gas companies and 3 Government Agencies have been included in the reconciliation scope.

2. Total differences between payments declared by the oil companies during 2011 and Government Agencies receiving these payments, prior to our reconciliation work, amounted to USD (4,244,840), as follows:
Total payments declared:

  Companies $3,436,243,783,  Government $3,440,488,623,  Difference (4,244,840) , 0.1%

3. Following our reconciliation work, we were able to adjust all the discrepancies, both in respect of declarations made by the companies and those made by the Government Agencies:
Total payments declared 

  Companies $3,453,285,817, Government $3,453,285,817, Difference 0.
The types of adjustments made during our reconciliation work, together with their values, are detailed in section 4.3 of this report.

4. We set out in the tables below a summary of the amount declared by the extractive companies at the end of the reconciliation exercise.
(numbers are the same from the Companies and Government, with all differences zero.)

1 ConocoPhillips 1,991,016,698
2 Eni Timor-Leste 401,268,453
3 Santos 365,391,369
4 Inpex Sahul 386,287,273
5 Tokyo Timor Sea Resources 290,213,987
6 Woodside Petroleum 607,763
7 Minza Oil & Gas 91,746
8 Petronas 107
9 Oilex 417,407
10 Reliance Exploration & Production 3,563,379
11 Talisman 6,419,484
12 Japan Energy E and P 29,751
13 AusAid 7,978,400
Total 3,453,285,817

5. We set out in the tables below a summary of the taxes declared by tax at the end of the reconciliation exercise.
(numbers for each revenue stream are the same from the Companies and Government, with all differences zero.)

Petroleum Tax Directorate 1,319,808,421
1 Income tax 659,025,791
2 Additional Profits Tax/Supplemental Profit Tax 569,338,573
3 Branch Profits Tax -
4 VAT 16,196,459
5 Withholding Tax 16,185,154
6 Wages Tax 7,399,504
7 Penalty / Interest 51,662,940
8 Other Payments -
National Petroleum Authority 2,125,498,996
9 FTP - Condensate/Crude Oil 119,655,237
10 FTP - Liquefied Petroleum Gas 35,015,765
11 FTP - Gas 83,102,923
12 Profit oil & gas payments 1,883,696,071
13 JPDA - Application Fee 5,000
14 JPDA - Seismic Data Fee -
15 JPDA - Development Fee 3,064,000
16 JPDA - Contract Service Fee 960,000
17 TL Exclusive Area - Application Fee -
18 TL Exclusive Area - Seismic Data Fee -
Central Bank of Timor-Leste 7,978,400
19 TL Exclusive Area - License Fee/Surface Fee 7,978,400
Total 3,453,285,817

Tim Woodward, Partner,  Moore Stephens LLP
150 Aldersgate Street, London EC1A 4AB

Update, 16 January 2013:
The final versions of the 2010 and 2011 EITI reports were officially released on 28 December 2012, just in time to conform with EITI rules. They are slightly more disaggregated than the preliminary versions. In his cover letter, Minister for Petroleum and Mineral Resources Alfredo Pires, who chairs the Timor-Leste EITI Multi-Stakeholder Group (TL-MSG) wrote:
   "Timor Leste, will no longer compromise on contract discloser and disaggregated information.
   "I realize that, for one reason or another, not everyone shares the view that the current reports should be so detailed. The current report does not have the full consensus of the TL MSG but it does have the blessing from the majority of the TL MSG.
   "After carefully considering the implications of publishing such a detailed report, and having carefully looked at the pros and cons, I reached the conclusion that the pros outweighed the cons, therefore as Chairperson of the TL-MSG I have ordered the publication of the 2010 and 2011 reports as agreed by the majority of TL-MSG."

26 November 2012

Measuring inflation more effectively

Timor-Leste's National Statistics Directorate (DNE) publishes Consumer Price Index (CPI) reports to measure inflation in Timor-Leste. They are updating their 11-year-old system with technical help from the Australian Bureau of Statistics. Using information from the (as-yet-unpublished) 2011 Household Income and Expenditure Survey (HIES), they will change the weights for different product groups and also hope to produce a monthly national CPI. DNE recently organized a workshop where two ABS experts explained how CPI is derived and presented proposed changes. Following a lively discussion, DNE encouraged participants to share additional thoughts, so La’o Hamutuk wrote the following:

La'o Hamutuk Submission on revising TL's Consumer Price Index (abridged)
21 November 2012

Download PDF of La'o Hamutuk's complete submission in English or Tetum.

Thank you for encouraging La’o Hamutuk to give suggestions. We believe that a solid understanding of today is essential to developing good strategies for tomorrow, and are glad that DNE has asked users of your publications for input.

We are not experts in statistics, although we see CPI as an important tool for advancing economic justice. Measuring inflation is a challenging undertaking which cannot be reduced to a single monthly number, and we hope our observations will help policy makers understand and control the increasing cost of living for Timor-Leste’s citizens.

Timor-Leste’s economy and consumption patterns are very different from Australia. Timor-Leste has a diverse  economy, and our small size makes variations more extreme. In addition to the obvious differences for the 25% of Timorese who live in Dili, there are differences among and within the districts. Those which border Indonesia purchase more “informal” imports, while those which produce coffee have seasonal variations. In each district, people who live in towns buy differently from those in more remote areas. Therefore, we worry that increasing the frequency of national CPI statistics while reducing the number of places sampled could introduce inaccuracies.

We appreciate that the CPI measures effects on households. In an economy like Timor-Leste, where a small fraction of people has most of the income, indicators based on dollars (such as GDP and GNI) give a misleading picture. In spite of double-digit GDP growth, the percentage of Timorese people in poverty has increased to more than 50%, and we hope that the new CPI will reflect the living conditions of this disadvantaged and vulnerable majority.

Market principles often don't apply in Timor-Leste. When buyers don't know that a product is cheaper somewhere else, or if going there is too difficult, some sellers charge more. When vendors don't understand that some income is better than none, they ask the same price until a perishable product becomes unsellable. Can DNE's published price data include variation of prices among stores or localities to help reduce this lack of information?

Timor-Leste is extremely import-dependent, and the prices of imports are often very different than the prices of local products for which they substitute. DNE’s recent 2011 Trade Report shows that exports were $13 million, with $319 million in imports. The Balance of Payments is more striking – during 2011 $1,764 million left Timor-Leste while only $381 million came in (plus $3,240 million in oil income, which could drop to zero in about 12 years). Imports are mostly purchased by more affluent, urban people, and a CPI which mainly includes imported goods does not reflect most people’s lives. Is it possible to disaggregate the data, to enable comparison of changes in price differences between, for example, imported and locally produced rice? Increasing local production to substitute for imports is essential to Timor-Leste’s future, and such data would assist policy development.

Approximately half our population lives below the poverty line, largely in rural areas, and we suggest that a separate CPI be calculated to indicate their costs of living. With fewer options and less resources, they are hit harder by inflation, and it is important to measure and understand these effects.

For example, Timor-Leste imports vehicles and fuel, but almost no rural people have cars or motorcycles. They walk, occasionally using horses or public transportation when they require goods or services not available in their vicinity, such as health care or education. Rather than purchase Aqua, they walk long distances to undrinkable sources. Rather than purchase LPG or kerosene, they gather firewood. They cannot purchase many tradable items which others buy, sometimes doing without, producing for themselves or bartering in the subsistence economy. But when they really need to purchase something, inflation makes their scarce money buy less. How can the CPI reflect their reality?

19 November 2012

Konta Jerál Estadu loke informasaun hakfodak no tristeza

 Fulan kotuk Parlamentu simu Opiniaun Tribunal Rekursu kona-ba Konta Jerál Estadu (KJE), relatóriu finanseiru Governu durante tinan 2011. Prezidente Komisaun C konvida La’o Hamutuk atu hato’o perspetiva ba KJE iha Audiénsia Públiku, 15 Novembru.
La’o Hamutuk hato’o katak rubrika ida mak hamosu tristeza iha planu Fundu Infrastrutura ne’ebé la lista iha Orsamentu Jerál Estadu (OJE) 2011, mak kontratu $1,258,192 ne’ebé asina ho Nevan Construction atu harii residénsia ba Ministra Finansa, hodi aumenta kontratu $283,515 ne’ebé asina ona iha 2010. Hodi ilustra katak delegasaun podér fiskalizasaun Parlamentár nian ba Ministra/u Finansa atu realoka Fundu ne’e bele kria risku katak rekursu povu nian la ba povu nia interese.

Maske Tribunal fó opiniaun katak KJE ne’e kumpre ona Lei Orsamentu no Jestaun Finanseiru (LOJF), maibé La’o Hamutuk iha opiniaun ne’ebé diferente tanba iha despeza barak hosi Fundu Kontinjénsia la urjente atu halo. LOJF hateten despeza hosi kontinjénsia akontese bainhira iha “caso de necessidades urgentes e imprevistas.”

Hanesan despeza $176,322 ba saláriu asesor Olgario de Castro durante 2011, loloos tenke preve ona antes iha Orsamentu Estadu no hetan aprovasaun. Olgário durante ne’e nudár Prezidente ba Konsellu Investimentu Fundu Petrolíferu Timor-Leste. La’o Hamutuk preokupa tanba sá nia tenke hetan saláriu espesiál ne’ebé urjente duke selu hosi dotasaun ba konsultan sira iha Ministériu Finansa.

Despeza seluk ne’ebé preditavel no tenke mai hosi alokasaun normal iha orsamentu ministerial mak despeza ba saláriu no viajen internasionál ba konsultan no profesóres UNTL, bolseiru APTECH-India, iklan iha Foreign Policy Magazine no besik tokon $9 ba kompañia Esperansa Timor Oan (ETO) atu fornese kombustivel ba Ministériu Infrastrutura. La’o Hamutuk hanoin kontinua polítika hanesan ne’e sei hatún autoridade Parlamentár, enkoraja planeamentu ne’ebé fraku no hafraku transparénsia no kontabilidade estadu nian.

 La’o Hamutuk mos apresia Opiniaun Tribunal hodi sujere rekomendasaun Tribunal tenke implementa ho obrigatóriu. Hanesan rekomendasaun ba kontabilidade, aprovizionamentu, no informasaun komprensivu no disagregadu. Katak dokumentu prestasaun konta estadu nian tenke inklui pagamentu ne’ebé ministériu sira halo ba “instituições autónomas” ne’ebé iha nia okos.

La’o Hamutuk konkorda Opiniaun ne’e atu KJE inklui reseita Autoridade Nasionál Petróleu, Banku Central, RTTL no TimorGAP. KJE mós tenke inklui osan ne’ebé tama ba Fundu Petrolíferu, la’ós de’it ida ne’ebé transfere ba Orsamentu Estadu, nune’e bele hadi’ak liu tan transparénsia no kontabilidade ba Parlamentu no públiku.

Aleinde ne’e, KJE mós mensiona despeza tokon $68 ba kombustivel veíkulu no jeradór. Ne’e la konsistente ho relatóriu Diresaun Nasionál Estatístika ba Estatístika Komérsiu External katak iha 2011 Timor-Leste importa gazoel no gazolina ho valor tokon $37, ba uzu estadu, komersiál no públiku. La’o Hamutuk deskonfia iha buat balu la’o laloos, no sujere atu Parlamentu Nasionál bele husu resposta Governu ba diskrepansia ne’e.

09 November 2012

TL's MCC scores getting worse

A few days ago, the U.S. Government's Millennium Challenge Corporation (MCC) released its annual scorecards for Low- and Low-Middle income developing countries. These Fiscal Year 2013 (FY13) scores describe the situation in 2011.

The 20 scores come from ratings by several international agencies and compare each country with others in the same income category. They are in three broad areas: Economic Freedom, Investing in People and Ruling Justly. If a country passes at least half the indicators in every area, they are eligible for an MCC Compact (major grant support), under the philosophy of helping those who help themselves.

The graph at right shows how Timor-Leste's scores on MCC indicators have changed over last four years. Timor-Leste has not been Compact-eligible since Fiscal Year 2009, although we do receive some support through the MCC Threshold Program to help improve our anti-corruption and health scores.

Since 2010, MCC has categorized Timor-Leste as a Low-Middle Income Country (LMIC)  since 2010, due to oil revenues which make up about 3/4 of our income. MCC has rated Timor-Leste since 2004; click here for previous scorecards and an analysis of MCC's history in Timor-Leste.

Unfortunately, MCC ratings for Timor-Leste declined significantly this year. Although this is partly because some MCC indicators are inaccurate for Timor-Leste, most of it is because our economy, governance and human services are not improving as quickly as other LMICs.

We scored well on Fiscal Policy because we had no external debt in 2011. The Health Expenditure score is a statistical error. (MCC measures this as a percent of GDP, and Timor-Leste's GDP does not include  oil revenues, producing a score four times higher than it should be. As a percentage of GNI, we spend less on health than all but three LMICs.)

Timor-Leste improved on Business Start-up (because it takes less time to get a business license) and moved up slightly on Freedom of Information (because other countries got worse). MCC changed how they decide if Civil Liberties is passing, so we moved from fail to pass even though our score did not change.

Unfortunately, Timor-Leste's scores worsened on every other measure, although none moved from "pass" to "fail." We now barely pass Natural Resource Protection and Political Rights. Our 13.5% Inflation rate is higher than all other LMICs, although not quite failing (defined as above 15%).

Our Control of Corruption score continues to fall -- only two of the 33 LMIC countries (Iraq and Republic of Congo) scored worse. Nobody gets MCC Compact funding without passing Control of Corruption.

To become eligible for a compact again as a LMIC, Timor-Leste needs to pass Control of Corruption, at least one more indicator in "Investing in People" and at least two more in "Economic Freedom." In addition, we must maintain passing grades in all indicators which we passed in Fiscal Year 2013.

Follow these links for MCC's FY2013 scorecards of all countries, a description of the indicators or the history of MCC and Timor-Leste.

05 November 2012

What interests the UN Security Council?

After neglecting Timor-Leste for 23 years, the United Nations Security Council has held 48 substantive open debates on this country since August 1999, totaling more than 135 hours. You can follow Security Council Members’ interests by counting how often they say particular words and phrases. For example, “impunity” was mentioned every ten minutes during debates in 2010, but only once in the three-hour debate last February. Similarly, “rule of law” and “accountability” have received less attention recently, although much more than they were given during UNAMET and UNTAET.

La’o Hamutuk often suggests that the United Nations and other development partners give more attention to human security (health, education and socio-economic justice) and less to the security sector of military and police. Every year, 25 times as many Timorese children die preventable deaths from illness and malnutrition as people of all ages are killed by violence. Although the Security Council talked about poverty and economic issues in 2010, their focus has moved elsewhere. We hope that their final Timor-Leste debate on 12th November will consider how the international community can help Timor-Leste’s state and people build our non-oil economy to achieve sustainable, inclusive development.

On 4 November, La'o Hamutuk wrote what may be our last letter to the Security Council prior to their discussion of Timor-Leste. Click here for more information, including analysis, UN documents and La’o Hamutuk’s many past letters to the United Nations.

Update, 19 November:
The Security Council held its final meeting on Timor-Leste on 12 November.  Timor-Leste was represented by Foreign Minister Jose Luis Guterres, since the Prime Minister was occupied with a g7+ conference in Haiti.  For the first time in 8 years, the word "impunity" was not uttered even once during the 2-1/2 hour meeting. Access transcripts and other documents here.

17 October 2012

Timor-Leste mós selu barak liu ba kombustivel

Bainhira kondutór no motorista sira hadau malu atu hetan litru gazolina tan ne’ebé sira bele sosa, Diresaun Nasionál Estatístika (DNE) hosi Ministériu Finansa RDTL publika sira nia relatóriu ne’ebé foti kestaun interesante kona-ba importasaun kombustivel ba Timor-Leste. Tuir relatóriu ida ne’e, Alfándega hateten ba DNE katak Timor-Leste importa tokon $39 ba gazolina no gazoel durante 2011 ba uzu públiku, komersiál no privadu nian tomak.

Relatóriu Ezekusaun Orsamentál ba 2011 ne’ebe Ministériu Finansa publika hatudu katak Estadu rasik gasta tokon $68 ba kombustivel ba veíkulu no jeradór sira. Bainhira sasán hirak ne’e importa, ida ne’e hare ba hanesan buat ruma la’o laloos katak Governu Timor-Leste selu barak liu duke valor sasán ne’ebé deklara sai tama mai rai laran.

Karik ita halo estimasaun ba kuantidade kombustivel ne’ebé jeradór no veíkulu sira uza hosi konsumidór kada ema no hosi setór privadu, montante total ne’ebé selu ba kombustivel iha Timor-Leste durante tinan kotuk maizumenus tokon $78, besik dala-rua kompara ho saida mak ita importa tuir relatóriu DNE.

La’o Hamutuk husu ba Diretór DNE kona-ba ida ne’e iha lansamentu Relatóriu Komérsiu iha semana kotuk, no nia hamnasa no hateten katak nia hatene de’it kona-ba informasaun importasaun nian ne’ebé nia simu hosi Diresaun Alfándega. La’o Hamutuk husu ba Komisáriu Anti Korrupsaun no Provedor ba Direitus Umanus no Justisa atu esplora katak korrupsaun ka maladministraun akontese duni ka lae.

Ita bele imajina esplikasaun balu:
  1. Importador kombustivel sira fó presu ba Estadu ho folin ne’ebé as liu ba kombustivel ne’ebé sira importa, atu halo lukru ne’ebé boot.
  2. Montante kombustivel ne’ebé tama mai iha Timor-Leste la hakat mai liu hosi Alfándega
  3. Estadu hetan kombustivel menus kompara ho montante ne’ebé sira selu ba
  4. Publikasaun númeru iha relatóriu ida seluk ka hosi relatóriu rua ne’e hotu ne’ebé mai hosi Ministériu Finansa nian laloos
Atu komprende liu tan kontradisaun ida ne’e, La’o Hamutuk mós hare ba semester primeiru 2012. DNE nia Indikadór Statistikal Trimestral nian hatudu tokon $32 ba importasaun kombustivel minerais tomak (inklui gazolina, gazoel, aviasaun, kerosene/mina-rai, LPG no kombustivel sira seluk) entre Janeiru to Juñu. Durante iha periodu ne’ebé hanesan, Relatóriu Ezekusaun Orsamentál nian indika katak Estadu gasta tokon $42 ba kombustivel ba veíkulu no jeradór sira. Maske diferensa ne’e ki’ik uitoan liu kompara iha 2011, Estadu Timor-Leste nafatin selu barak liu tan kompara ho valor importasaun ne’ebé deklara ona.

Tabela fó númeru iha rihun hosi dollar Estadus Unidus
Maske sentrál elétrika Hera ne’e fou-foun dezeña atu uza Oleo Pezadu, maibé to ohin loron sentrál ne’e uza kombustivel gazoel ne’ebé tula ho ró tama mai liu hosi Tibar no tula ho kamioneta hodi hakat Dili ba Hera. Deloitte nia audit (paragraf 3.3.2) dehan katak kombustivel ne’ebé atu uza ba jeradór sira ne’e uza ba veíkulu estadu no privadu nian, tanba ne’e, ami fiar katak ne’e serteza duni atu aumenta figura sira ba veíkulu no jeradór sira nian iha relatóriu ezekusaun, ba komparasaun ho total figura gazoel no gazolina iha relatóriu komérsiu nian.

La'o Hamutuk fiar katak inkonsistensia entre estadu nia gastu no importasaun kombustivel hatudu katak relatóriu balun publika ona kona ba ekonomia no despeza estadu nian iha valor no fasil atu analiza. Tanba ne'e, ami agradese Ministériu Finansas ne’ebé fó sai informasaun ida ne'e, no fó korajen ba ema no organizasaun seluk atu utiliza. Ita hotu bele aprende buat barak!

Timor-Leste gov't also pays too much for fuel

While Dili drivers were scrambling to find the next affordable litre of petrol, the National Statistics Directorate (DNE) of the RDTL Ministry of Finance released its 2011 Annual External Trade Statistics report (right), which raises interesting questions about fuel imports to Timor-Leste. According to this report, Customs told DNE that Timor-Leste imported $39 million worth of gasoline and diesel fuel during 2011 for all public, commercial and private use.

The 2011 Budget Execution Report (left) from the Ministry of Finance's National Treasury Directorate shows that the State alone spent $68 million for vehicle and generator fuel. Since all of this was imported, it seems odd that Timor-Leste’s government is paying much more than the declared value of what is coming into the country.

If we estimate the amount of generator and vehicle fuel used by personal and private sector consumers, the total amount paid for fuel in Timor-Leste last year may have been about $78 million, nearly double what DNE says was imported.

La'o Hamutuk asked the Director of DNE about this at the launch of the Trade Report last week, and he smiled and said he knows only about the import information the Customs Department provides to DNE. La’o Hamutuk is asking the Anti-Corruption Commissioner and the Provedor for Human Rights and Justice to explore whether corruption or maladministration has occurred.

We can imagine several explanations:
  1. Fuel importers are charging the State a very high markup on the fuel they import, making a large profit.
  2. A significant amount of fuel comes into Timor-Leste without passing through Customs.
  3. The State is getting less fuel than it pays for.
  4. The numbers published in one or both of these reports are wrong.
To better understand this confusing situation, La'o Hamutuk also looked into the first half of 2012. DNE’s Quarterly Statistical Indicators show $32 million worth of mineral fuels (including gasoline, diesel, aviation, kerosene, LPG and other fuels) was imported between January and June. During the same period, the Budget Execution Report indicates that the State spent $42 million on vehicle and generator fuel. Although the discrepancy is a little smaller than in 2011, Timor-Leste is still paying much more than the declared value of the imported fuel.

Here are the details, in thousands of U.S. dollars
Although the Hera Power plant was designed to run on heavy oil, to date it has been using diesel fuel shipped into Tibar and trucked across Dili to Hera. Deloitte's audit of EDTL (paragraph 3.3.2) found that fuel intended for generators is "often" diverted for state or private vehicle use. Therefore, we decided to total the vehicle and generator fuel figures in the execution report, and compare them with the total of diesel and gasoline figures in the trade report.

La'o Hamutuk believes that the apparent contradiction between State purchases and fuel imports demonstrates that published reports about the economy and state spending are useful and are not difficult to analyze. We appreciate that the Ministry of Finance has made this data available, and we encourage others to also use it. There's a lot to learn!

Update, 30 October:

In late October, Timor-Leste decided to award a $50.4 million contract to Esperanca Timor Oan to import and supply 47 million liters of diesel fuel for the Hera power plant. Click for more information. The Government will pay $1.07 per liter, at least 16¢ more than it should cost to buy this fuel in Singapore or Indonesia, ship it to Tibar, and pay Timor-Leste excise tax and import duty.

16 October 2012

Public mtg: What does TL need after UNMIT?

Invitation to La’o Hamutuk Public Meeting
What does Timór-Leste need from the International Community after UNMIT’s mandate ends?

Tuesday 23 October 2012.    9:00 am - 12:15 pm
Dili University (UNDIL), Mascarenhas, Dili
Uphill from the Alola Foundation, across from the former CNE office

La’o Hamutuk invites the public to participate in a discussion about the mandate of UNMIT in Timor-Leste which will finish this December.

During the mandates of the UN in Timor-Leste since 1999, UN assistance has helped achieve some good results, such as the creation of a democratic state under rule of law, with peace and security. Unfortunately UNMIT has not yet implemented some important commitments, including ending impunity for crimes against humanity committed during the Indonesian occupation. In addition, the UN and the State of Timor-Leste have not yet chosen a sustainable and inclusive development path.

The people of Timor-Leste, together with our leaders, must take responsibility for these gaps after UNMIT leaves.

  • Deputy Special Representative of the UN Secretary-General, Shigeru Mochida 
Reflections on the successes of UN missions in Timor-Leste and what remains to be achieved
  • RDTL Minister of Foreign Affairs, José Luis Guterres 
Reflections on hopes for what the UN Missions were not able to do during their time in Timór-Leste
  • Representative, ETAN, Jill Sternberg 
International solidarity from ETAN now and in the future after UNMIT ends
  • Director, Fundasaun Mahein, Nelson Belo 
The Security Sector after UNMIT’s mandate finishes
  • Researcher, La’o Hamutuk, Inês Martins 
Sustainable development after UNMIT finishes
The public meeting will be in Tetum and English. We are grateful for your attention and participation.

Enkontru públiku La’o Hamutuk nian
Saida mak Timór-Leste presiza husi Komunidade Internasionál hafoin mandatu UNMIT remata?
Tersa feira 23 Outubru 2012,  tuku 09:00 dadeer to’o 12:15 meudia
Fatin: Universidade Dili (UNDIL) Maskariñas, Dili
Fundasaun Alola nia leten ba, Ex. Edifísiu CNE nia oin

La’o Hamutuk konvida públiku atu mai partisipa diskusaun relasiona ho mandatu UNMIT iha Timór-Leste nia ne’ebé sei remata iha fulan Dezembru tinan ida ne’e.

Durante mandatu Nasoins Unidas iha Timór-Leste dezde 1999, ONU nia asisténsia ajuda atinje rezultadu balu di’ak, hanesan kriasaun estadu direitu demokrátiku, ho dame no seguransa. Infelizmente, UNMIT seidauk implementa kompromisu importante balun, inklui hakotu impunidade husi krime kontra umanidade ne’ebé akontese durante okupasaun Indonézia. Ida seluk, UN no estadu Timór-Leste seidauk hili polítika ba dezenvolvimentu ho diresaun ida ne’ebé sustentável no inklusivu.

Lakuna hirak ne’e povu Timór-Leste hamutuk ho nia ukun na’in sira mak tenke simu responsabilidade hafoin UNMIT sai.

Oradór sira:

  • Vice-Reprezentante Espesiál Sekretáriu Jerál ONU, Shigeru Mochida 
Reflesaun kona ba susesu ne’ebé Misaun ONU halo iha Timór-Leste no saida mak seidauk atinje

  • Ministru Negósiu Estranjeiru, RDTL nian José Luis Guterres 
Reflesaun kona ba esperansa ba buat ne’ebé misaun ONU la konsege halo durante nia misaun iha Timór-Leste

  • Reprezentante ETAN, Jill Sternberg
    Solidariedade Internasionál husi ETAN agora no ba futuru hafoin UNMIT remata

  • Diretór Fundasaun Mahein, Nelson Belo 
Analiza setór seguransa hafoin mandatu UNMIT remata

  • Peskizadór La’o Hamutuk, Inês Martins 
Dezenvolvimentu sustentável hafoin misaun UNMIT remata
Enkontru públiku ne’e la’o iha lian Tetum no Inglés. Mak ne’e de’it ami nia konvite ba ita boot sira nia atensaun no partisipasaun la haluha hato’o obrigadu barak.

11 October 2012

Komentariu ba PN kona-ba Orsamentu Retifikativu

Submisaun ba Parlamentu Nasionál
Hosi La’o Hamutuk
Kona-ba Proposta Orsamentu Retifikativu 2012
10 Outubru 2012

  • Ajustamentu tinan ne’e husik tusan ba 2013.
  • Retifikasaun loloos liu montante tokon $54.
  • Orsamentu nafatin la responde ba jéneru.
  • Transferénsia osan justifika duvida ba projetu Tasi Mane.
  • Ita labele la’o hela de’it iha dalan “urjente”.
  • Parlamentu tenke husu informasaun tan kona-ba Fundu Kontinjénsia.
  • Osan ba veteranu: direitu ka kumpre promesa eleisaun?

Ba da uluk La’o Hamutuk hakarak hato’o parabéns ba terseiru lejizlativa Parlamentu Nasionál ne’ebé foin eleitu, hodi espera katak lejizlativa ida ne’e bele hala’o knar ne’ebé di’ak liu atu benefisia interese povu Timor-Leste tomak nian. Iha fulan Jullu liu ba, ami hakerek karta ida  ba ita-boot sira bainhira foin hetan pose nudár reprezentante povu, ami espera katak ho ami nia karta no ami nia submisaun ida ne’e bele kria no haforsa liu tan ita nia relasaun no komunikasaun ba futuru.

Maske Komisaun Parlamentu Nasionál la fó konvite ba organizasaun sosiedade sivíl sira, inklui La’o Hamutuk atu ba audiénsia públiku hanesan tinan hirak liu ba atu hato’o apresiasaun ba Orsamentu Retifikativu 2012 ne’e. Maibé iha biban ne’e ami nafatin hakarak hato’o ami nia komentáriu no apresiasaun hanesan tuir mai ho esperansa katak hanoin hirak ne’e bele ajuda liu tan ita-boot sira hodi halo desizaun ida ne’ebé di’ak no matenek liu ba futuru Timor-Leste.

Ajustamentu tinan ne’e husik tusan ba 2013.

Proposta Orsamentu Retifikativu 2012 hateten (hare pajina 8) katak “retifikativu ida ne’e la aumenta total despeza Governu nian,” no “sei redús orsamentu Fundu Infrastrutura nian” nudár poupansá ba despeza estadu adisionál iha 2012.

Maibé infelizmente, mudansa orsamentál ida ne’e hanesan fali Governu empresta hela osan projetu Tasi Mane no dotasaun ba instalasaun kuadru prepagu EDTL nian iha Orsamentu Jerál 2012, no hanoin atu selu fali “empréstimu” ne’e iha Orsamentu Jerál Estadu 2013 ne’ebé sei mai daudaun. [Exposição de Motivos: “Foram transferidos do Fundo das Infra-estruturas $50 milhões de dois projectos do Tasi Mane, com a condição de serem repostos em 2013.”]

Nune’e, loloos retifikasaun ne’e sei aumenta tokon $54 ba tokon $1,674 ne’ebé Parlamentu Nasionál aprova tiha ona. Maske aumenta ho montante relativamente ki’ik, maibé karik ita hare ho didi’ak, lala’ok orsamentál hanesan ne’e sei kria obrigasaun atu aumenta orsamentu estadu iha futuru.

Iha ami nia submisaun lubuk ba Parlamentu Nasionál iha pasadu, ami fila-fila ona hateten katak ita nia rekursu naturais ne’e uitoan de’it. Karik ita gasta lalais no la kuidadu, ita sei hamamuk ita nia rezerva petrolíferu, riku-soin prinsipál ne’ebé ita iha, no sei halo susar ita nia jerasaun sira iha futuru. Ohin ema barak kontente hela ho ita nia Fundu Petrolíferu, maibé, ita labele orgullu ba ida ne’e de’it bainhira ita labele asegura atu benefisia osan sira ne’e ba povu tomak.

Iha loron 29 Agostu liu ba, Ministra Finansa Emilia Pires hateten katak envelope fiskál ba tinan orsamentál 2013 nian sei tun ba biliaun $1.3. Ami apresia teb-tebes mudansa diresaun orsamentál ida ne’e, ne’ebé durante ne’e ami advoka katak hodi bele ajuda Timor-Leste atu labele monu kle’an liu ba malisan rekursu.

Ita nia inflasaun sa’e maka’as liu tanba despeza públiku ne’ebé sa’e maka’as tinan-tinan laho kreximentu kapasidade ba produsaun lokál. Nune’e ami sujere ba Parlamentu Nasionál atu hare kle’an liu ba gastu Governu nian hodi hamenus despeza sira balu ne’ebé la nesesáriu hodi bele ajuda Timor-Leste nia ekonomia.

05 October 2012

Filling gaps in "Taxing Times"

The excellent new ABC Television Four Corners documentary Taxing Times in Timor highlights critical issues for Timor-Leste, and will open they eyes of Australians and others. The focus of the program – Timor-Leste's fight against oil companies who are ripping off this new, small, impoverished country – is important for people everywhere.

Two years ago, La'o Hamutuk researched and wrote Making the Oil Companies Pay What They Owe, which we just updated. We are writing this blog to fill some gaps in the program, especially for people who live in or want to know more about Timor-Leste.

Unfortunately, the program often reports Timorese politicians' public relations, rather than their actions or underlying facts. Nearly everyone interviewed is on the Government payroll. The few alternative voices (opposition leader Mari Alkatiri, the World Bank’s Hans Beck, La’o Hamutuk’s Charles Scheiner) are edited to unreservedly support Government policies, giving a partial picture of their views.

Prime Minister Xanana Gusmão appropriately focuses on the tremendous needs for education, nutrition, agriculture and rural roads. Unfortunately, the failure to adequately address these needs does not come from foreign advisors or lack of money, but from the Government’s own budget and implementation policies. Timor-Leste  spends much less on health and education than other developing countries. Three-fourths of our people are farmers, but only 1.4% of public spending is for agriculture. Only one-third of the money allocated for roads last year was actually used. Infrastructure mega projects – especially oil-fueled electricity and Tasi Mane oil facilities, consume the majority of public funding, with questionable returns.

The key question is not how many dollars to spend, but how to get the best value from Timor-Leste’s finite, nonrenewable resource wealth. In 2011, 46% of all state expenditures went for electricity. The $1.2 billion national electricity project costs five times what it would cost to put solar panels on every house in the country. Fuel and maintenance of the power plants and national grid will cost more than this one-time investment in solar panels which require no fuel, local grids, and little maintenance. Currently, ratepayers pay less than one-quarter of the cost of generating power, so Timor-Leste’s limited funds will subsidize affluent people who use the most kilowatt-hours.

Similarly, Timor-Leste's government will 'invest' 5-10 billion dollars in the Tasi Mane south coast petroleum infrastructure project with few spin-off benefits and no demonstrable net financial return. Investments in Timor-Leste’s human resources -- health care, sanitation, nutrition, and primary education -- would generate a more certain result. Investments for economic development should prioritize agriculture and light industry, creating jobs while producing food and products to substitute for imports.

The documentary misleads viewers by ignoring the first and largest greatest theft of Timor-Leste’s oil reserves – Australia’s continuing ‘occupation’ of 40% of our oil and gas wealth by refusing to negotiate a maritime boundary. In the map at right, everything above the green line, including the blue and orange areas with all of Greater Sunrise, Bayu-Undan, Kitan and Laminaria-Corallina, would belong to Timor-Leste under current international law.

In 2006, Australia coerced Timor-Leste's negotiators into accepting a "gag rule" in the CMATS Treaty which prohibits this government from talking about maritime boundaries in any forum. Although the treaty may expire next February, the injustice of this arrangement, compounded by the arrogance of Woodside which was vividly portrayed in the documentary, is at the heart of the controversy over the Greater Sunrise pipeline.

Timor-Leste's determination to bring this gas to our shores is deeper than the dubious economic reasons examined in La'o Hamutuk's 2008 report. It is at the core of this nation's struggle for sovereignty. ConocoPhillips, Woodside, Shell and other companies drilled for oil in Timor-Leste's maritime territory during the illegal Indonesian occupation, and their current tax evasions continue this pattern of stealing from the Timorese people. 

Timor-Leste’s total oil and gas wealth is limited, totaling $40-$50 billion, so $3 billion in unpaid taxes is significant. But at current spending and economic growth trends, these reserves – which finance more than 95% of State activities and two-thirds of our entire economy -- could be used up in about 12 years. We welcome the billions which will be recovered through more effective tax collection – but they can only delay bankruptcy by one or two years.

Four Corners persuaded a fairly new World Bank official to acknowledge that the Bank faulted itself for encouraging Timor-Leste not to spend unsustainably. This does not accurately reflect the 232-page review by the Bank’s Independent Evaluation Group (9 MB), which rated the “overall outcome” of the Bank’s support to Timor-Leste during 2000-2010 years as “moderately unsatisfactory.” The Bank’s IEG found only one sector of the Bank’s work “highly satisfactory” -- “assistance to Timor-Leste in securing its petroleum revenues and managing them transparently.” On the other hand, the IEG concluded that the Bank was “unsatisfactory” on poverty and unemployment alleviation, youth unemployment and disaffection, legislation, private sector development and agriculture.

A seven-page response from Finance Minister Emilia Pires is appended to the IEG’s report, praising the Bank’s openness and methodology, while pointing out the shortage of concrete data. However, the Minister praised as a “contribution to data enhancement” a 2010 “Poverty assessment” by the Bank which “demonstrated a 9% reduction in poverty [from 50% in 2007 to 41% in 2009] … as a result of newly exercised social and expansionary fiscal policies.” The Government and others cited this number repeatedly, but the Bank had invented it with a questionable statistical “imputation” which did not measure poverty.

Unfortunately, both the Government and the Bank were wrong about 2009, and the poor are still with us. The Government's as-yet-unreleased 2011 Household Income and Expenditure Survey, based on people’s actual living situations, confirms that the Bank’s prediction of reduced poverty in 2009 was erroneous.  The sad reality is that in 2011 about 50% of Timorese families were below the poverty line, just as in 2007, which means that about 70,000 more people are in poverty.

Government spending has increased eight-fold since 2007, with total expenditures of about $4 billion. The GDP growth from this deluge of dollars – mostly flowing to foreign companies – has enriched a few people, barely touching the impoverished rural majority. We need inclusive, sustainable, equitable development.

In this democratic, sovereign nation, Timor-Leste’s officials choose what advice to follow. We hope they base their decisions on objective, comprehensive, long-term, fact-based analysis, and not on self-serving agendas or unrealizable fantasies. La’o Hamutuk believes that the Four Corners team shares this goal, but unfortunately the latter part of Taxing Times in Timor does not reflect it.

20 September 2012

Ors.Rekt.2012: Deve husi ita nia-an

Kintu Governu Konstitusionál Timor-Leste ne’ebé  foin eleitu daudauk ne’e husu ona ba Parlamentu atu aprova revizaun (rektifikasaun) ba biliaun $1.7 iha Orsamentu Jerál Estadu 2012 ne’ebé  vigora ona iha Dezembru tinan kotuk. Despeza  foun, barak liu ba pensaun veteranus no idozus, sei uza osan ne’ebé  iha ona dotasaun ba projetu Tasi Mane ne’e sei la gasta hotu iha tinan ida ne’e. Maske nune’e, Governu promote katak sei troka osan ida ne’e iha orsamentu 2013 ne’ebé sei aprezenta iha fulan oin.

Iha Sesta-Feira 14 Setembru, Konsellu Ministru aprova proposta orsamentu rektifikativu ba tinan klaran (textu tomak iha Portugés) no haruka ida ne’e ba Parlamentu ba aprovasaun. Parlamentu hahú nia sesaun lejizlativa nian hafoin loron ne’ebá, no Komisaun C ba asuntu ekonómiku ba Baucau iha Segunda-Feira atu diskute proposta lei orsamentu nian.

Proposta revizaun nian la muda montante total hosi Orsamentu Estadu 2012 nian. Maibé, orsamentu ne’e aumenta tokon $55.4 ba despeza foun, ne’ebé  tokon $50 empresta hosi tokon $164 ne’ebé aloka tiha ona ba projetu infrastrutura petróleu Tasi Mane iha Fundu Infrastrutura iha Orsamentu Estadu 2012 “ho kondisaun katak sei troka fali iha 2013.”
Timor-Leste nia Orsamentu Estadu iha tinan oin provavelmente sei sai tan orsamentu ida ne’ebé sa’e maka’as liu iha planeta ida ne’e, La’o Hamutuk  fiar katak sei lori ita sai kiak liu iha tinan 12 oin mai.

Despeza boot foun mak hanesan tuir mai, ho detallu liu iha dokumentu orsamentál iha ami nia website:
  • Tokon $26.9 ba tan pensaun veteranu, hodi aumenta ba tokon $80.4 ne’ebé iha ona dotasaun, ne’ebé to’o iha 18 Setembru, gasta ona tokon $73.8;
  • Tokon $7.1 ba tan pensaun idozu, hodi aumenta ba tokon $35.9 ne’ebé iha ona dotasaun ba Seguransa Sosiál, ne’ebé to’o iha 18 Setembru gasta ona tokon $16.7;
  • Tokon $6.1 ba tan Rezerva Kontinjénsia nian, hodi aumenta ba tokon $21.2 ne’ebé hosi montante ne’e, to’o iha 18 Setembru karik gasta ona tokon $1.6;
  • Tokon $6.4 ba tan iha dotasaun tolu ba militár no polísia, aumenta ba tokon $64.1 ne’ebé iha ona dotasaun, hosi ne’e to’o iha 18 Setembru, gasta ona tokon $36.9;
  • Tokon $9.0 ba tan iha dotasaun hitu ba edukasaun, saúde, transporte maritima, sosiedade sivíl no funsaun seluk.
Proposta retifikasaun orsamentál mós muda fundus entre ministériu sira, inklui ministériu sira ne’ebé taka tiha (Ministériu Ekonomia no Dezenvolvimentu no Sekretáriadu Estadu Polítika Enerjetika) no ministériu foun sira ne’ebé foin harii husi ministériu tuan sira ne’ebé fahe tiha ba. La’o Hamutuk nia pájina website kona-ba rektifikasaun ida ne’e inklui analiza kle’an no ligasaun ba Livru Orsamentu ka Programa Governu nian no material relevante sira seluk iha Inglés, Tetum no Portuguese.

19 September 2012

OrsRect2012: Borrowing from ourselves

Timor-Leste's newly elected Fifth Constitutional Government has asked Parliament to approve a revision (rectification) of the $1.7 billion dollar 2012 State Budget enacted last December. The new expenditures, mainly pensions for veterans and old people, will use money already appropriated for the Tasi Mane project which will not be spent this year. However, the Government has promised to replace this money in the 2013 budget that it will present to Parliament next month.

On Friday 14 September 2012, the Council of Ministers approved a mid-year budget rectification proposal (full text in Portuguese) and sent it to Parliament for enactment. Parliament began its legislative session the next day, and Economics Committee C went to Baucau on Monday to discuss the proposed budget law.

The proposed revision does not change the total amount of the 2012 State Budget. However, it adds $55.4 million in new spending, to be financed by borrowing $50 million from the $164 million allocated to the Tasi Mane petroleum infrastructure project in the 2012 budget's Infrastructure Fund "on condition of being reinstated in 2013." Timor-Leste's 2013 State Budget will probably continue to be one of the fastest-growing in the world, which La'o Hamutuk believes leads to bankruptcy in about 12 years.

The biggest new expenditures are these, with details in the budget documents on our website:
  • $26.9 million more for veterans' pensions, adding to $80.4 million already appropriated, of which $73.8 million had been spent by 18 September;
  • $ 7.1 million more for old-age pensions, adding to $35.9 million already appropriated for Social Security, of which $16.7 million had been spent by 18 September;
  • $ 6.1 million more for the Contingency Reserve, adding to $21.2 already appropriated, of which apparently only $1.6 million had been spent by 18 September;
  • $ 6.4 million more in three items for the military and police, adding to $64.1 million already appropriated, of which $36.9 million had been spent by 18 September;
  • $ 9.0 million more in seven other items for education, health, water transport, civil society and other functions.
The proposed rectification also shifts funds between ministries, including those where were terminated and new ones created by dividing previous ministries. La'o Hamutuk's web page on this rectification includes deeper analysis and links to the Government's Budget Book (Tetum), Program and other relevant materials in English, Tetum and Portuguese.

11 September 2012

Members of Parliament / Deputadu sira

Tomorrow, 12 September, Prime Minister Xanana Gusmao will present the program of the Fifth Constitutional Government of Timor-Leste to the National Parliament which was elected last July. The session will be broadcast live on TVTL starting at 10 am, and may continue on Thursday and Friday.

La'o Hamutuk is publishing a list of the Members of the new Parliament with their committee assignments, parties and mobile numbers, which should help citizens communicate their views to their elected representatives. Click on the images at right, or download a PDF file which will be easier to print.

We have published a similar list of Ministers and other members of the Government, including their email addresses.

20 July 2012

Infrastructure for Timor-Leste’s people

Everyone agrees that Timor-Leste’s current infrastructure is unacceptable. Some parts still have not recovered from 1999, when Indonesian soldiers and police and pro-Indonesia militia destroyed almost everything they could. Most people have no running water, many villages are still not connected by passable roads, schools and public buildings are far below standard, lack of irrigation limits food production, we need more hospitals and clinics, and many villages still lack consistent electricity. Why aren't we building these facilities?

Timor-Leste allocated more than half of its 2011 and 2012 state budgets to physical infrastructure. Many, including La’o Hamutuk, are concerned that the lower priority given to human resources – health and education – will limit this nation’s future. We also wonder if a billion dollars to build the centralized, oil-powered electricity system is wise  -- solar panels on every house in the country would cost one-fifth this much, less than it will cost every year just to fuel and maintain the Hera and Betano power plants.

People across the country are crying out for infrastructure – especially rural roads, schools and water – to improve their lives and help them integrate into the national economy. To understand how the Government is responding, La’o Hamutuk reviewed 2011 spending on this sector. The Ministry of Finance published this information last April in the 2011 Budget Execution Report; current and historic data is on the Budget Transparency Portal.

The 2011 budget allocated $599 million to the Infrastructure Fund for projects costing more than one million dollars or taking more than one year to build. Three-quarters of this was for electricity, and $150 million was for everything else: water, schools, hospitals, government buildings, military bases, police posts, irrigation, roads, bridges, ports, public housing, airports, etc.

We don’t believe that spending money is the best way to evaluate effectiveness. It’s more important to look at the results -- if a project was completed with good quality and is being used. However, public expenditure is necessary (but not sufficient) to build infrastructure. Better design, procurement and project management can improve the value Timor-Leste gets for its money (experts tell us that road projects here cost twice as much as similar ones in Indonesia or the Philippines), but zero spending will produce zero results even with flawless implementation.

When the year’s finances were closed, 96% of the money allocated for the national electricity system had been disbursed, mostly with two foreign companies. However, only 30% of the money appropriated for all other projects was spent.

The blue diagonally striped bars show how much Parliament appropriated in the 2011 budget for large infrastructure projects in each sector, on the right-hand scale in millions of dollars. The rules of the Infrastructure Fund allow the Government to shift money around, and the red checkered bars (and red numbers) show the final allocation for the year. The green solid bars (and green numbers) show how much was spent during 2011. Although the Infrastructure Fund rules allow unspent money to be carried over to 2012, the budgeted amounts are what the Government had planned to spend in 2011 alone, even for multi-year projects.

The wide yellow bars, on the left hand scale, show what percentage of the final infrastructure budget allocation was actually spent in 2011. Although nearly all of the money for electricity was used, nothing was spent for housing, even though the import of prefabricated houses for the MDG-Suco program had been justified because of an urgent need to build them quickly. Only half of the small amount allocated for health infrastructure was spent, as was only 1/8 of the original education appropriation. Many people complain about the poor state of the road network, and the Government increased the transport allocation from $23 to $40 million during the year – but they only spent $11 million, 27%.

As the Fifth Constitutional Government begins work, we hope they will pay more attention to results and implementation. We also hope they will explore how Timor-Leste can get more value for its money, so that the cost of building infrastructure projects here will be comparable with the rest of Southeast Asia. Reforms in procurement, project management, and corruption prevention will help, but better fiscal analysis, project conception and design, leadership, quality control and supervision are also essential.

Before embarking on more megaprojects, the government should conduct sincere cost-benefit analyses, with transparency and public consultation, to determine if the social and economic return on the investment justifies the expenditure. We have only a few years of oil and gas money remaining – and if we don’t invest it wisely we will be left with nothing. At the start of 2012, Timor-Leste’s Infrastructure Fund had $121 million that wasn’t spent last year and $761 million more from the 2012 state budget, and was expecting $43 million more in loans. We encourage the new Government, as it begins to implement the Strategic Development Plan, to use Infrastructure Fund money for projects which will benefit our entire population – unlike the two biggest items: $261 million more for the electricity system and $100 million to begin building the Suai supply base for offshore petroleum activities.