President’s warning on Gusmao Government's wasteful public spending too little too late

MEDIA RELEASE

Dili, 18 October 2010

President’s warning on Gusmao Government's wasteful public spending too little too late

On 14 October 2010, Timor-Leste’s President Jose Ramos-Horta formally opened the new parliamentary year with a warning to the Gusmao government over its “waste” in public spending, but former Prime Minister and FRETILIN MP Estanislau da Silva noted that the President’s call for more “prudency, rigor and … sound criterion” is “too little too late”.

Mr da Silva said, “We say too little too late, because the tale of wasteful spending and corruption that has plagued government since 2007 has been already widely and roundly criticized. Yet the President continued to permit such large budgets to be promulgated without raising even the slightest concern.  His warning is welcome but belated, and unfortunately billions have now been wasted without substantive benefits to the public”.

President Horta in his speech to parliament said that Timor-Leste now had more funds than it ever had since independence to spend on national development due to petroleum revenues, and called on the government to contain budget increases for public spending. He told MPs and the government who were present: “The development investment needs of the country are also many. The money must be spent prudently and rigorously, because it is not enough to meet all of the needs.

“Public spending is indispensable and may without doubt bring many benefits for the country, when it is done with prudency, rigor and on sound criterion,” he added.

The President said he supported public spending, especially in the form of some public transfers that have in his view assisted to develop the economy, “but I am not convinced that the same can be said in relation to the most part of other public spending.  As is the case for example with some infrastructure spending, such as the rehabilitation of government buildings and other spending from budget line items associated with the acquisition of equipment, goods and services. Often, works, equipment and other acquisitions are purchased at exorbitant prices and the ultimate impact on the national economy is less than what it should be given the large amounts spent by the State.”

The President called on parliament to “guarantee greater rigor in budget execution, with respect to development capital spending.  Badly invested capital, badly spent public money, is money wasted, and means less money available to be spent on needy projects.”

Da Silva said that the government would be seeking another budget increase, taking this next year’s budget to around US$1 billion, resulting in a total accumulated budget since 2007 of almost US$4 billion.

“This is an astronomical amount of money being spent in the last 3 to 4 years, with very little public benefit.  But it has enriched a small socio-political elite linked to this de facto government by either family or party associations. We have been concerned about this trend from day one, and now we are glad to have the President come around to our point of view. But it is a bit late, now that so many billions have been spent. He must take his fair share of responsibility for allowing this to continue to occur until now,” warned da Silva.

Da Silva said, FRETILIN was concerned about the budget proposals, especially because of the waste, corruption and the inflationary impact it was having on the economy, warning that if the government continued to withdraw such large amounts from the Petroleum Fund, then the fund would be depleted within 5 to 10 years.

“All the Petroleum Fund money is going out and there is less and less money coming in from other non-oil and gas sources. As the President says, our people are not getting value for their money, with a few becoming very, very rich. But worst of all, the Fund will go bust if we are not careful,” da Silva warned.

For further information please contact Jose Teixeira MP on +670 728 7080