Media service of the FRETILIN party.
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Deputadu Jose Teixeira
Tel. Mobile: +670 728 7080

Thursday, January 13, 2011

De Facto Prime Minister Xanana slams "Norwegian virus" to ward off criticism of bad governance

FRETILIN.Media Flash:

The debate over Timor-Leste's national budget for 2011 began in the national parliament yesterday.

The following is an excerpt from de facto PM Xanana Gusmao's speech during his presentation of the 2011 national budget in parliament yesterday (excerpt below). His reference to "Norwegian virus" is a new term to all of us. Norway has been an example in the design, not a template, and the management of Timor=Leste's petroleum resources transparently and in a manner that ensures "inter-generational equity", and sustainability in all its forms.

Clearly, Mr Gusmao has faced some criticisms from experts in this area, with whom we agree, that the sustainable and transparent management of Timor-Leste's petroleum fund is at grave risk from government behaviour as well as the proposed amendments to the laws. The necessarily prudent but flexible approach to what is a very small and vulnerable sovereign fund in the current legislation due to the institutional/other constraints that exist in Timor-Leste, is under challenge in what is nothing but an irresponsible money grabbing exercise to undertake government projects that have been ill-conceived and ill-planned.

Mr. Gusmao has slammed Norway's world renowned transparent and sustainable petroleum sector governance, a model for good governance in this area, as a "virus". It demonstrates that he is allergic to criticisms of his policies and regards good governance approaches in petroleum revenue management as a "virus" to him and his government. Good governance is a "blessing", not a "virus". This illustrates his approach that he knows all, to the exclusion of anyone else, even those experienced for nearly a century in utilizing their petroleum revenues sustainably, transparently and for socially responsible purposes.

His reference to "Norwegian virus" underlies tensions arising from dissatisfaction by experts with this policy direction and his frustration that he cannot get his own way. It is most of all unfounded and unfair, because it was precisely building a strong social welfare system that Norway did, whilst sustainably managing its main revenues for many years, its petroleum revenues.

It is counter-productive to keep deriding what are sound policies simply for short term political gain as Mr. Gusmao is doing, despite his rhetoric that it is all for the benefit of the people. The absence of benefits flowing to the people from nearly US$2 billion worth of spending in 3 years demonstrates very clearly these policy failures.

FRETILIN will hold Mr. Gusmao accountable for these irresponsible policies, and highlight the bad governance in this and other sectors during this budget debate.

Excerpt for English translation of his speech:

"Estimated Sustainable Income (ESI) is estimated at 734 million in 2011, which means an increase of 232 million in relation to 2010. This increase is mostly due to a change to the methodology of how the ESI is calculated, or in other words, previously the ESI calculation was made based on the forecast of WTI (West Texas Intermediate) using the low scenario estimate of oil prices the Energy Information Administration (EIA) provided in its annual report, which was considered overly conservative.

For the 2011 ESI calculation, an average of low estimates referenced by the EIA was used such as the WTI oil price as a reference for the ESI calculation. The average of two EIA scenarios is well within the confidence interval of 68 percent of medium term prices, and significantly below the average of future prices. Our Independent Auditor of the Petroleum Fund has certified these calculations and confirmed that they are being made in accordance with the requirements of the Petroleum Fund Law. Oil price predictions according to the WTI is for $68 per barrel in 2011 and $71 in 2012, increasing to $ 110 per barrel in 2024. This review of the methodology is testament to the competence of the Ministry of Finance, and after 5 years of the ESI existence, critically reviewed the whole process and found that overly cautious can undermine the credibility of the ESI calculations. Any opinion defending this overly cautious forecast method, suffers from the Norwegian virus, forgetting that Norway itself took many decades to adopt it ... after Norway had become economically and socially developed, without worrying about support for mothers, the elderly and veterans, or that teachers and midwives are still few, or with malaria and tuberculosis, or the lack of desks and chairs in schools, or with water and sanitation, or electricity, or subsistence agriculture, or the nascent private sector, among many other challenges that Timor- Leste has to solve."

Jose Teixeira - FRETILIN Parliamentary Spokesperson
Member of the National Parliament of the
Democratic Republic of Timor-Leste
Mobile: +670 728 7080

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