Allocate yesterday, spend tomorrow

This graph shows the balance in the Treasury (the Government’s operating bank account) at the end of each quarter, as well as the amount transferred from the Petroleum Fund into the Treasury each quarter. The Treasury balance increases at the end of each fiscal year (June 2007 and December 2008-2010), because the Government saves unused money from the Petroleum Fund to spend in the following year, in violation of the principles of the Petroleum Fund Law.

At the end of 2010, the Treasury account held $340 million, by far the highest level in Timor-Leste’s history.  The proposed 2011 budget includes $141 million of this, which is a way for the Government to spend more money without having to increase taxes or revenues. It is a dangerous method, undercutting fiscal responsibility and honest budgeting.