Briefing for Civil SocietyBriefing for Civil Society

General State BudgetGeneral State Budget

By La’o HamutukTimor-Leste Institute for Development Monitoring and AnalysisRua Martires da Patria, Bebora, Dili, Timor-LesteTel: +670 332 1040email: info@laohamutuk.org Website: www.laohamutuk.org

25 January 201325 January 2013

Topics to discussTopics to discuss

• Overview of state budget

• Consequences of petroleum dependency

• Economic justice

• The Infrastructure Fund: past and future

• Six books about GSB 2013, and other sources

• La’o Hamutuk’s submission to Parliament

Basic ConceptsBasic Concepts

• Reseita/Revenue/Rendimentu• Despesas/Expenditure/Gastus• Transferénsia/Transfers• Virement• Gap or Deficit• Carry Over• Sustentaveis/Sustainable/Sustentavel• Investment vs. spending• Public debt• Inflation

Last year’s original budgetLast year’s original budget

Original budget, does not includes changes from the mid-year rectification.Original budget, does not includes changes from the mid-year rectification.

• Most people live by subsistence agriculture.

• Many farms are o the south coast.

• The budget only allocates $36 million (2.0% of GSB 2013) for agriculture, compared with $26m in the 2012 rectified budget.

Sources of Sources of GSB 2013 GSB 2013 (million (million USD) USD)

T-L Depends on money from oilT-L Depends on money from oil• 2013 State Budget:………………………………………. $1,798 million

$1,198 million $1,198 million (67%) will come from the Petroleum Fund in 2013.(67%) will come from the Petroleum Fund in 2013. Maizumenus t$400 Maizumenus t$400 (22%) comes from the PF in the past and future.(22%) comes from the PF in the past and future.

• Non-oil GDP in 2013:..…………………………………………Non-oil GDP in 2013:..………………………………………… $1,507 million $1,507 million • GNI in in 2013:…………………………………………………........ $4,304 million

$2,309$2,309 million million comes from exporting non-renewable oil and gas. Together withcomes from exporting non-renewable oil and gas. Together with$ 489 million $ 489 million from Petroleum Fund investments, this is 65% of our entire from Petroleum Fund investments, this is 65% of our entire national economy, and 95% of State income. national economy, and 95% of State income. Oil revenues will fall every year and could end in 2024. Oil revenues will fall every year and could end in 2024.

• State activities, paid for with oil money, are about half of our “non-oil” economy, State activities, paid for with oil money, are about half of our “non-oil” economy, because this money circulates in the local economy.because this money circulates in the local economy.

• Oil revenues don’t provide jobs or money for people – they all go to the State.Oil revenues don’t provide jobs or money for people – they all go to the State.

• Although the Petroleum Fund can support inter-generational equity, it does not Although the Petroleum Fund can support inter-generational equity, it does not guarantee good governance or prevent corruption, and will be empty soon if guarantee good governance or prevent corruption, and will be empty soon if current policies continue.current policies continue.

South Sudan is the only national in the world which is more South Sudan is the only national in the world which is more dependent on oil and gas than Timor-Leste. dependent on oil and gas than Timor-Leste.

Financial benefits from the Sunrise Financial benefits from the Sunrise projectproject

Balance of tradeBalance of trade

Exports

(US$/million)Imports

(US$/million)

2010 17 289

2011 12 319

Balance of payments 2011: Income: $ 490 million (excl. oil)

Outgo: $1,873 million

Year-on-year inflation, from Year-on-year inflation, from DNEDNE

Impacts of inflationImpacts of inflation

• Prices go up.Prices go up.

• Capacity to buy things Capacity to buy things falls.falls.

• Little people suffer Little people suffer most.most.

• Hard to start business.Hard to start business.

Many children will become Many children will become youth.youth.

Timor-Leste is struggling to find jobs for 15,000 people who will enter the Timor-Leste is struggling to find jobs for 15,000 people who will enter the work force in 2012.work force in 2012.

In 2024, it will be around 30,000 each year, and the oil will be gone. In 2024, it will be around 30,000 each year, and the oil will be gone. Today’s youth will have children of their own.Today’s youth will have children of their own.

Dili is very different from the Dili is very different from the districts.districts.

More than 70% of Dili’s population are among the wealthiest More than 70% of Dili’s population are among the wealthiest 20% of Timorese, while only 2.5% are below the poverty line. 20% of Timorese, while only 2.5% are below the poverty line.

More than half of families outside Dili live in poverty.More than half of families outside Dili live in poverty.

Consequences of Consequences of borrowing borrowing when oil runs dry.when oil runs dry.

• Even without money, T-L will have to Even without money, T-L will have to prioritize debt repayments over human prioritize debt repayments over human development.development.

• The public service sector will get The public service sector will get weaker.weaker.

• Borrowing today gives a heavy burden Borrowing today gives a heavy burden to future generations.to future generations.

• Using the Petroleum Fund to pay for Using the Petroleum Fund to pay for debt today ignores future generations’ debt today ignores future generations’ right to live.right to live.

• We will create poverty for our children.We will create poverty for our children.

The Petroleum Fund shall contribute to a wise management of the petroleum resources for the benefit of both current and future generations.

(Petroleum Fund Law)

What do 600,000 working-age What do 600,000 working-age Timorese do for work?Timorese do for work?

Donor support is less important Donor support is less important now.now.

TL gasta menus ba Servisu TL gasta menus ba Servisu SosiaisSosiais

Nasaun sira ne'ebé atinje MDG gasta 28% husi GSB Nasaun sira ne'ebé atinje MDG gasta 28% husi GSB ba saúde no edukasaun. ba saúde no edukasaun.

Timor-Leste aloka de'it 11.7% iha 2013.Timor-Leste aloka de'it 11.7% iha 2013.

Allocation of 2013 GSB: $1,797.5 Allocation of 2013 GSB: $1,797.5 millionmillion

Salaries $ 160.3mGoods and services, including FCDH) $ 461.7mMinor Capital $ 47.2 m Public transfers (Individual/organization) $ 236.5mDevelopment Capital (including Infra. Fund) $ 891.9m Donors $ 200.4m

Consolidated Fund $1,002.2mInfrastructure Fund (including carry-over & borrowing) $ 752.9mHuman Capital Development Fund $ 42.4m Total $1,797.5m

Execution of 2012 final Execution of 2012 final budgetbudget

Source: Transparency Portal, 23 January 2013

Infrastructure Fund 2012. Infrastructure Fund 2012. Allocation and executionAllocation and execution

Projetu boot husi Fundu Projetu boot husi Fundu InfrastruturaInfrastrutura

Sources of budget Sources of budget informationinformation

• La’o Hamutuk’s websiteLa’o Hamutuk’s websitehttp://www.laohamutuk.org/econ/OGE13/12GSB2013.htm

• Budget Law in Jornál da Repúblika Budget Law in Jornál da Repúblika http://www.jornal.gov.tl/

• Finance Ministry reports about executionFinance Ministry reports about executionhttp://www.mof.gov.tl/budget-spending/budget-execution/?lang=enhttp://www.mof.gov.tl/budget-spending/budget-execution/?lang=en

• General State Accounts(2011) General State Accounts(2011) http://www.laohamutuk.org/econ/OGE11/http://www.laohamutuk.org/econ/OGE11/CGA11/LHsubComCGSA2011Nov12.htmCGA11/LHsubComCGSA2011Nov12.htm

• Transparency Portal Transparency Portal http://www.transparency.gov.tl/english.html

• Google translate Google translate http://translate.google.com/

State State budget law budget law with 5 with 5 annexesannexesRevenues, Revenues, autonomous autonomous agencies and agencies and expenditures in expenditures in general.general.

http://http://www.laohamutuk.org/www.laohamutuk.org/econ/OGE13/LawEn.pdf econ/OGE13/LawEn.pdf

Six books from Finance Six books from Finance MinistryMinistry1.1. Overview / summary Overview / summary

Objectives, strategy, economy, revenues, spending financing, Objectives, strategy, economy, revenues, spending financing, Petroleum Fund, new initiativesPetroleum Fund, new initiatives

2.2. Annual Action Plans Annual Action Plans From each ministryFrom each ministry

3.3. Districts Districts Programs in each district, subdistrict and sucoPrograms in each district, subdistrict and suco

4.4. Budget items (two volumes) Budget items (two volumes) To the level of directorates and agenciesTo the level of directorates and agencies

5.5. Development PartnersDevelopment PartnersFrom each donor, for each agency, project and districtFrom each donor, for each agency, project and district

6.6. Special Funds Special Funds List of projects in the Infra. & Human Capital funds for 5 years.List of projects in the Infra. & Human Capital funds for 5 years.

All can be found on La’o Hamutuk’s website.

Book 2 GSB 2013.Book 2 GSB 2013.

Annual action Annual action

plans, an plans, an

example. example.

Includes budget, profile of civil Includes budget, profile of civil servants, and plans for all servants, and plans for all activities.activities.

http://www.laohamutuk.org/echttp://www.laohamutuk.org/econ/OGE13/BksDec12/OGE2013on/OGE13/BksDec12/OGE2013Bk2Dec2012pt.pdfBk2Dec2012pt.pdf

Ezemplu husi book 2.Ezemplu husi book 2.

Book 3 GSB Book 3 GSB

2013. 2013.

DistrictsDistricts

Includes staffing, Includes staffing, PNDS, PDL, PDID, PNDS, PDL, PDID, PDD1, PDD2, donors.PDD1, PDD2, donors.http://http://www.laohamutuk.org/www.laohamutuk.org/econ/OGE13/BksDec12/econ/OGE13/BksDec12/OGE2013Bk3Dec2012te.pdf OGE2013Bk3Dec2012te.pdf

Books 4A & Books 4A & 4B. Example: 4B. Example: ParliamentParliamentIncludes many Includes many detailed pages about detailed pages about each directorate.each directorate.For 2014-2017, For 2014-2017, “projections” just add “projections” just add 4% every year.4% every year.

http://www.laohamutukhttp://www.laohamutuk.org/econ/OGE13/BksDe.org/econ/OGE13/BksDec12/OGE2013Bk4aDec2c12/OGE2013Bk4aDec2012pt.pdf 012pt.pdf

Book 5 GSB 2013. Development Book 5 GSB 2013. Development

PartnersPartners

Information about Information about each sector, each each sector, each project.project.

http://http://www.laohamutuk.org/www.laohamutuk.org/econ/OGE13/econ/OGE13/BksDec12/BksDec12/OGE2013Bk5Dec2012en.OGE2013Bk5Dec2012en.pdf pdf

Book 6 GSB 2013. Infrastructure Fund & Book 6 GSB 2013. Infrastructure Fund &

FDCH.FDCH.

Information Information about each about each sector, each sector, each project.project.

http://http://www.laohamutuk.org/www.laohamutuk.org/econ/OGE13/econ/OGE13/BksDec12/BksDec12/OGE2013Bk6Dec2012eOGE2013Bk6Dec2012en.pdfn.pdf

Total expenditures from the Total expenditures from the Consolidated Fund during Consolidated Fund during

20112011

During 2011, the Ministry of During 2011, the Ministry of Education paid from the Education paid from the Contingency Fund 93 times, Contingency Fund 93 times, totalling $4 million. Most were totalling $4 million. Most were not urgent or unforeseeable.not urgent or unforeseeable.

Download the entire list from:Download the entire list from:http://www.laohamutuk.org/econ/OGE11/CGA11/ContingencyFund2011.pdf

…

Contracts in the Education Sector from Contracts in the Education Sector from the Procurement Portalthe Procurement Portal

Download the entire list from:Download the entire list from:http://www.laohamutuk.org/econ/portal/ProcurementPortal16Nov2012.pdf

Thank you.Thank you.

Get more and updated information fromGet more and updated information from•La’o Hamutuk’s website La’o Hamutuk’s website http://www.laohamutuk.org http://www.laohamutuk.org

•La’o Hamutuk’s blogLa’o Hamutuk’s bloghttp://laohamutuk.blogspot.com/ http://laohamutuk.blogspot.com/

•Reference DVD-ROM from La’o Hamutuk next month.Reference DVD-ROM from La’o Hamutuk next month.

Timor-Leste Institute for Development Monitoring and Analysis

Rua Martires do Patria, Bebora, Dili, Timor-LesteMailing address: P.O. Box 340, Dili, Timor-Leste

Telephone: +670 7723 4330 (mobile) +670 332 1040 (landline)Email: info@laohamutuk.org