08 June 2021

LH asks Parliament to strengthen proposed Budget Framework Law

Liga ba blog ida ne'e iha Tetum

Today, La’o Hamutuk delivered a submission (Tetum) to the National Parliament about the proposed Law on Budgetary Framework and Public Financial Management, sharing our thoughts, analysis and suggestions related to its content and systems to strengthen and improve transparency, accountability, and participation by the public and civil society. 

La’o Hamutuk researcher Eliziaria Febe Gomes told a hearing of Parliament Committee C that this proposed law “is an important opportunity to improve the shortcomings in the budget process, and we hope that this proposed revision will not introduce new weaknesses.” 

The Program-Based Budgeting model should include definitions.

This draft law specifies that the General State Budget will follow a model of Program-Based Budgeting. At this point, Government is using a definition of ‘program’ which is too general, with the result that implementing this system reduces transparency.

The draft law should define ‘program’ consistently and specifically. One option would be to use the system developed by the United Nations called COFOG (Classification of the Functions of Government). This system would enable comparison of allocations to programs in different years, and with other nations.

Keep the limit on the amount allocated to the Contingency Fund.

La’o Hamutuk encourages the distinguished Deputies to consider the risk that changing the rules for the Contingency Fund could reduce Parliament’s ability to carry out its Constitutional responsibilities to approve and monitor state expenditures.

Law no. 13/2009 on Budget and Financial Management currently limits the allocation to the Contingency Fund to no more than 5% of the entire state budget. Article 32 in the proposed Budget Framework Law repeals this limitation, while adding a condition that the Contingency Fund cannot be smaller than 2% of the budget. Spending from the Contingency Fund has never been close to 5%; the just-rectified 2021 State Budget raised the allocation to 3.2%. Between 2015 and 2020, contingency spending averaged less than 1% of the executed budget.

There is no need to increase the allocation to the Contingency Fund, and the 5% limit should stay in place. The proposed change creates a risk that future governments could misuse this Fund without a limit, and also reduces accountability.

Improve public availability of documents and ensure that the information is correct.

Some articles need to be strengthened to ensure that future Governments cannot arbitrarily decide what information to make public, and what to keep secret. This law should clearly define which documents the Government is required to distribute, ensuring that their content is accessible and readable by the public, considering the language and the format.

In its submission to Parliament, La’o Hamutuk identified ten articles which offer the chance to improve transparency and the quality of information.

The Major Planning Options Law should not interfere with Parliament’s role.

Article 47 in this proposed law introduces a new step in the budget process: a Major Planning Options Law (Lei das Grandes Opções do Plano), with the goal of setting the direction for the budget for the following year. However, Paragraph 47.9 sets a very short timetable for Parliament to approve the MPO law – within ten days of when Government submits it.

The new Budget Framework Law should not limit Parliament’s deliberations, and should allow enough time for public consultation.

The proposed Budget Framework Law is an opportunity to implement good practices for transparency and accountability.

La’o Hamutuk identified several opportunities to implement good practice according to international standards, including publishing a Mid-Year Review, publishing an Annual Report, and requiring Government to provide data in Excel format (not only PDF) to facilitate analysis. The submission also suggests ways to strengthen systems for consultation and public participation.

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