We believe that it is essential for the rule of law to apply in Timor-Leste, so Juvinal Dias of La'o Hamutuk wrote an article (Tetum original, English translation) which was published today in Timor Post and Diario Nacional. The following is a shortened version of the translation:
On 15 November 2010, the Government presented a Budget proposal to Parliament to spend $985 million, of which $734 million would come from the Petroleum Fund. The Government Estimated the Sustainable Income (ESI) at $734 million, so the 2011 budget would be within it.
However, on 28 January 2011, Parliament approved a Budget of $1,306 million, including $1,055 million from the Petroleum Fund, $141 million from the unspent balance from 2010, and $110 million from domestic revenues. Parliament amended the budget to spend $321 million more from the Petroleum Fund, of which $282 million is for the heavy oil electricity project. At this point, the Budget is pending promulgation by the President of the Republic.
Why did the President ask the Court of Appeals for advice?
Timor-Leste is a democratic nation under rule of law, and every citizen – including the President of the Republic, Government, Parliament and Courts – must respect the laws, the separation of powers and the mandate of each organ. Each organ should consider that Timor-Leste’s long-term national interest is in respecting our laws and Constitution. The law is not partisan politics; the law is an obligation for a democratic state.
President José Ramos-Horta sent a petition to the Court of Appeals on 7 February , asking for preventive appraisal before he promulgates the State Budget.
We need to understand the power the Constitution gives the President “To request the Supreme Court of Justice to undertake preventive appraisal and abstract review of the constitutionality of the rules, as well as verification of unconstitutionality by omission.”
The President needs a thorough, legal analysis before he promulgates or vetoes the Budget, as explained in the Constitution: “Within thirty days after receiving any statute from the National Parliament for the purpose of its promulgation as law, the President of the Republic shall either promulgate the statute or exercise the right of veto...”
Therefore, when the President uses his powers, it doesn’t mean that he is making accusations or creating a political sensation, but that the President is carrying out his Constitutional responsibilities as “the Head of State and the symbol and guarantor of national independence and unity of the State and of the smooth functioning of democratic institutions.”
What is happening in the 2011 State Budget?
This year Timor-Leste is creating two Special Funds (Infrastructure Fund and Human Capital Development Fund) with $599 million. The Government bases these funds on the 2009 Budget and Financial Management Law, which says “Whenever authorized by law, the Minister of Finance may establish special funds that are not part of the Consolidated Fund.” The Minister of Finance is responsible for managing the funds, whose expenditures can be shifted from one allocation or year to another as long as Parliament is informed.
However, the Constitution states that “The Budget law shall provide, based on efficiency and effectiveness, a breakdown of the revenues and expenditures of the State, as well as preclude the existence of secret appropriations and funds.”
From our point of view, the Government’s interpretation of the Budget and Financial Management Law undercuts the Constitutional requirement that Parliament “deliberate on the State Plan and Budget and the execution report thereof” and “monitor the execution of the State budget.” Even though Parliament itself approved the Budget and Financial Law, Parliament cannot abandon its Constitutional responsibilities.
Because of this controversial use of the Budget and Financial Management Law, it is very important for the President to make a wise decision to avoid secret budgets.
In addition, taking more money than the ESI from the Petroleum Fund may be illegal, because the Government has not met the requirement of the Petroleum Fund Law to provide: “a detailed explanation of why it is in the long-term interests of Timor-Leste to transfer from the Petroleum Fund an amount in excess of the Estimated Sustainable Income.” Since the Government itself did not ask to spend more than the ESI (Parliament added this amount to the budget), so we need the Court’s analysis. If the Court decides that taking more than the ESI is illegal, Timor-Leste could cancel the heavy oil electricity project, or if the project is to be continued, the Government must take more than the ESI from the Petroleum Fund.
The Government is contractually obligated to pay more than $380 million during 2011 for the electricity project. If the Court decides spending more than the ESI is illegal, the budget allocates only $163.7 million for this year.
What is the President asking the Court?
The letter the President sent to the Court asked three important questions:
1. Is creating the Special Funds via the Budget Law, rather than with a separate specific law, permissible under Constitution Article 145.2?
2. Does creating the Special Funds without specifying their detailed expenditures violate the transparency requirement of Constitution Article 145.2?
3. Does transferring $321 million more than the ESI without a detailed explanation violate Article 9 of the Petroleum Fund Law, which has superior force?
What will happen when the President hasn’t yet promulgated the budget?
Until the President promulgates the 2011 State Budget, Timor-Leste can apply the Duodecimal Regime defined in the Budget and Financial Management Law. The Government can make temporary budget appropriations to continue its activities. Under this regime, the Government can spend up to 1/12 of the budget allocation from the previous year each month.
Therefore, there will not be an economic or financial crisis, or a risk of interrupting Government services, as politicians and commentators are worried about.
In addition, we should remember that the Government itself (with Parliamentary agreement) delayed submitting the 2011 Budget by a month. Parliament and Government cannot prevent the President from carrying out his Constitutional duties.
Finally, we hope that this article can help our people, civil society, journalists and leaders understand the President’s Constitutional responsibilities. Thank you.