(L-R around table: MPs Manuel Tilman, Aderito Hugo da Costa and Cipriana Pereira. Guteriano Neves, Alexandra Arnassalon, Charles Scheiner and Juvinal Dias from La'o Hamutuk.)
We presented a 16-page submission (full text in Tetum and English) with the following main points:
The Resource Curse is truly here.
- The “Dutch disease” of inflation, currently over 13%, exacerbates poverty in Timor-Leste.
- We continue to neglect non-oil development and depend on imports.
- Our people are our most important resource, but the budget will cut the share for health and education while infrastructure mega-projects get most of the money.
- The MDG-Suco program exemplifies careless budget practices.
- Timor-Leste is a world leader in budget escalation, with a 407% four-year increase second only to Zimbabwe.
- The budget will spend 7.2% of our petroleum wealth from the Petroleum Fund, more than double the Estimated Sustainable Income. By 2014, Petroleum Fund withdrawals will be larger than oil revenues deposited into the Fund.
- Special Funds continue to erode Parliamentary authority, and the Budget documents are not accurate or complete about how the Infrastructure Fund is being used.
- Parliament needs complete information on expected project costs, such as the $950 million national electricity project, the $1.4 billion south coast highway, and other elements of the Tasi Mane petroleum infrastructure project.
- Electricity continues to dominate, receiving more than $370 million, with results lower than expectations.
- Agriculture deserves more than 1% of the budget, since it is the livelihood of more than 80% of our population.
- Parliament needs more information before approving borrowing. This budget is the first request to authorize loans, $33 million, but future loans will be much larger.
- The Tasi Mane project could be a multi-billion-dollar white elephant.
- The South Coast Highway will eat up another billion or more.
- The Timor-Leste Investment Company gets $200 million, which may be squandered on futile, useless, money-losing projects.
- “Take context as the starting point” is the first Fragile States Aid Effectiveness Principle. Parliament and Government should recognize that Timor-Leste is experiencing the Resource Curse, and take effective actions to prevent it from getting worse. In particular, plan realistically for continuing inflation and improve domestic productive capacity so that our resource wealth stays in our country.
- Give more attention to sustainable non-oil economic development which can benefit large numbers of people. This will be primarily based on agriculture, replacing import dependency and transient oil revenue, producing results which are equitably shared among our population.
- Give more attention to human resource development, especially education and health, focusing on actual results rather than statistics for international agency scores.
- Do not approve additional funding for the MDG-Suco housing program until you have accurate information about past and expected future expenditures and the number of houses to be constructed.
- Pay more attention to the negative environmental, social and economic impacts of industrialization, especially on people living near industrial or large infrastructure projects.
- Keep spending within sustainable levels, based on prudent projections of future oil prices, rather than the 7.2% of estimated petroleum wealth the Government is asking for. Avoid massive budget increases, keeping withdrawals from the Petroleum Fund within the 3% Estimated Sustainable Income. (If new investment strategies produce much higher returns, this could be revisited in future budgets.)
- Exercise Parliamentary fiscal oversight over the implementation of the liberalized investments enabled by the recent revision of the Petroleum Fund Law. Evaluate the sustainability of the fund, given actual spending levels and realistic expectations of returns on Fund investments.
- Before appropriating additional money for the Infrastructure Fund, demand a complete accounting of how the Fund was used during 2011, including what money was spent differently from the proposal in Budget Book 6 of the 2011 budget. Request more detail than one-line project descriptions on how the Government plans to use the $746 million it wants to add to the Infrastructure Fund in 2012.
- Do not approve the budget until the Government provides expenditure projections based on actual plans, rather than econometric models, with full life cycle costs and projected rates of return on multi-year physical infrastructure projects. Request complete cost and financing information for the implementation of the National Strategic Development Plan before approving money to carry it out.
- Request more information on the completion of construction and operation of the national electricity project, especially the heavy oil power plants. How much fuel will be required, what are operational and maintenance expenses, will this be contracted out or done by EDTL (or Manitoba), how much will ratepayers be expected to pay, what is the anticipated need for continuing subsidies from the state budget?
- Encourage policies which support food sovereignty and sustainable agriculture, increasing Timorese farmer’s human resources to enable them to enhance and diversify their production and add value to their products.
- Taking into consideration the experiences of other indebted developing countries, require information on all prospective loans before approving borrowing, including the sources, interest rates, conditionalities, collateral, default provisions and repayment schedules. Ask the Government to provide the proposed loan agreements.
- For projects which will be financed through loans, review the preliminary designs, financial analysis and projected rates of return.
- Do not appropriate funding for Tasi Mane project construction, including the supply base, until a solid economic cost/benefit analysis has been presented and discussed by Parliament. This needs to be more substantive and realistic than the glossy visions of the SDP, and should include accurate and detailed cost information and revenue and employment projections for the full project cycles.
- Before spending more money on the South Coast Highway, request information on expected traffic, total project costs, maintenance expenditures, associated loans, and land use.
- Before approving $100 million for the Suai Supply Base, review the plans, including expected customers and rates of return. Ask TimorGAP to provide a business and operational plan for this project, as well as a detailed design and economic spin-off projections, since they will be the eventual beneficiary of Parliament’s appropriation of the money.
- Do not approve funding for the Betano refinery and petrochemical plant until Parliament and the local community has had the opportunity for free, prior and informed consent over the actual amounts of land that will be used and the area affected.
- Insist that a legitimate Environmental Impact Assessment and Environment Management Plan be conducted for every component of the Tasi Mane project, as well as for the Betano power and related infrastructure.
- Implement Parliament’s Constitutional responsibilities by enacting laws to bring the TimorGAP national oil company and the Timor-Leste Investment Company under Parliamentary oversight.
- Do not approve investment capital for the Timor-Leste Investment Company until it has been established and presented its regulations to Parliament, with adequate transparency, checks and balances and oversight. Before significant capital is approved, request a well-thought-out business plan, including analysis of capital and operational costs and expected return for each project to be financed by TLIC.
- Make budgetary decisions based on facts, rather than on political propaganda, and encourage the Government to provide accurate information about our economy rather than campaign promises.
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