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Government´s plan to improve national budget execution
has received support from Development Partners, Joint Statement
from Timor-Leste and Development Partners Meeting, 24-26 April
2005
During the TLDPM meeting, entitled "Redefining Partnerships
To Ensure a Better Future", the development partners, including
the United Nations and the meetings´ co-host, The World
Bank, gave praise to the Government. Representatives from the
international community said they were impressed with the way
the Government had sought to implement the National Development
Plan (NDP) and the Millenium Development Goals (MDGs) at the heart
of the Government´s program. Special mention was made of
significant progress in nation building, restoration of basic
service delivery, and supporting the growth of the private sector.
The development partners were also impressed that the Petroleum
Fund legislation had been approved by the Council of Ministers,
and is currently pending discussion in the National Parliament.
This "international best practice" law was drawn up
by the Government to ensure that future generations will benefit
from the Timor Sea oil and gas revenues. The bulk of the revenues
will be saved and the Government will allocate only a small portion
to direct spending on infrastructure projects. The savings will
generate an income for years to come in the form of interest.
Through the process of approving the Government´s budget,
the National Parliament will establish an annual maximum value
for the transfer of monies from the Petroleum Fund to the national
budget. This will be based on a formula that calculates sustainable
revenues.
Conference participates noted that Timor-Leste is benefiting
from historically high crude oil prices. This means that the Government
could finance its entire national Fiscal Year 2005-2006 budget.
However, to achieve the goals of the NDP and the MDGs, the country
still needs contributions from the development partners. To this
end, the Government has created the Sector Investment Programs
(SIPs) in which it invites partners to participate. In 17 distinct
areas, the SIPs provide the answer to the critical investment
needs of the country - whether in infrastructure, or in the professional
training of the officials in the public administration. Through
the creation of the Sectoral Working Groups, a focussed and permanent
interaction is guaranteed between Government and development partners.
Even though the revenues from the Timor Sea have increased, the
Government is still having difficulties in executing the budget
for maximised service delivery to the people. To boost budget
execution and improve management and oversight of programs, the
Government has announced a restructure, effective July 1, 2005.
At the close of the third quarter of FY 2004-2005, budget execution
was at 64%. The delegates confirmed that they would continue to
financially support the Government, however, they emphasized that
they wanted to see clear improvement in the level of budget execution.
To this end, the development partners made suggestions for measures
that could help improve budget execution, such as a shift to ex-post
controls (ie. a delegation of authority from central government
to districts and line agencies). They also encouraged the Government
to mobilise the capacity of groups outside of Government, such
as civil society or the private sector, through creative partnerships.
The effort to ensure better budget execution is even more important
because the Government is now including expenditures that were
previously funded outside of the budget. The Government is asking
for an extension of national budget support from the development
partners from FY 2006 until FY2008 - in the form of the Consolidated
Support Program (CSP).
The delegates also stated that improved budget execution relied
upon comprehensive training in planning and financial management.
A long-term program of training in the management of public resources
is being finalised and will be essential to increase the level
of competency in the civil service.
Delegates heard that at the same time as petroleum and natural
gas revenues were increasing exponentially, non-petroleum gross
domestic product increased modestly. This, coupled with the fact
that Timor-Leste´s population is increasing at about 3%
per year, (meaning that this year more than 27,000 people are
reaching adulthood), indicates that poverty is probably rising.
To combat this, the Government is preparing to implement several
public works projects that, directly and indirectly, will create
jobs.
An increase in public services delivered by the Government is
a clear priority for the next fiscal year. Some of the concrete
objectives defined by the Government are: repairing roads, increasing
access to health services in the districts, increasing the number
of people with access to electricity and safe drinking water,
and improving the quality of education.
The Government is facing considerable challenges: creating the
conditions for the private sector to play a critical role in the
development of the country and create jobs, mainly in the rural
areas where the unemployment is highest. The investment laws,
recently approved by the National Parliament, offer a serious
contribution in this regard. Similarly, the Investment and Promotion
Agency, which will begin functioning shortly, will also contribute
to this goal. In addition, the development partners suggested
a focus on streamlining administrative and customs procedures.
Showing their commitment to a democratic and developed Timor-Leste,
the development partners, including the United Nations and the
World Bank, promised to continue to help the Government. They
pledged their continuing financial support to assist the Government
in their efforts to achieve the goals of the NDP and MDGs - including
through the specific projects that were presented by the Government
over the past two days.
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