Thoughts from La’o Hamutuk for the 2022 Timor-Leste Development Partners Meeting
La’o Hamutuk, a 20-year-old civil society organization, actively participates in constructing and developing Timor-Leste through monitoring, analysis and evidence-based advocacy related to public policies. La’o Hamutuk also distributes information to help empower our people, and shares perspectives with leaders in Government and development partners.
At this time, we would like to thank development partners for their contributions in this difficult time, including the health crisis and two natural disasters.
Timor-Leste’s current situation
The Petroleum Fund will soon be empty.
The discussion and projections on the 2022 Budget Rectification and the 2023 Major Planning Options law reminded everyone that the Petroleum Fund will be used up quickly, unless we rapidly invest in the long-term interests of the Timorese people.
Right now, Bayu-Undan production is almost finished, and no other fields are ready to provide revenue. Between January and April 2022, the value of the Petroleum Fund’s investments dropped 10% ($1.6 billion). Although the Ministry of Finance included alarming projections about a fiscal cliff in the Major Planning Options law which Parliament just passed, this calamity could happen even sooner than they estimated.
The fiscal cliff threatens our people’s well-being, because our capacity to pay for basic services, such as health and education, will be constrained when our Petroleum Fund is empty. Our sovereignty is also at risk if Government takes out loans which it cannot repay.
Timor-Leste’s economy is not yet diversified.
We continue to spend money on the Tasi Mane Project, ports and airports -- projects with dubious returns. We have not seen any evidence that these projects will help develop Timor-Leste's economy.
The pattern of spending on large projects undercuts diversifying a sustainable economy, and causes our nation to continue to depend on imports. Every year, Timor-Leste imports around $500 million worth of goods, but our non-petroleum exports are about $20 million per year. Local food production cannot feed our people.
So far, Timor-Leste covers our trade deficit with money from petroleum revenues and investment returns. But this is not sustainable, as the Petroleum Fund could be empty in ten years.
When the Fund is empty, our nation will not be able to pay for imports, and, unless local food production has greatly increased, our people will suffer even more. Already, most people have no food security, and most children under five are stunted. If this situation worsens, how will it impact us? Economic diversification is not an abstract issue – it is essential for survival.
Climate change makes this situation even worse.
The entire world is very worried about climate change, which is caused by large industries, including the production of oil and gas, which release greenhouse gases, leading to human crises all over the planet, including in Timor-Leste. We feel the impacts and also contribute to climate change that all humanity is confronting.
Climate change turns some of our problems into catastrophes, including food insecurity, reduced agricultural production, access to clean water, and quality of infrastructure. We cannot adapt indefinitely to a situation which continues to get worse, and every nation (especially large ones, including donors) must reduce its greenhouse gas emissions.
Recommendations for Development Partners
- Invest more in the productive economy, oriented toward domestic consumption. Timor-Leste will be able to confront difficult situations more effectively if our economy is productive and sustainable. Please prioritize agricultural production to address food insecurity and malnutrition by strengthening existing systems of small-scale production and building on the capacity, strength and commitment that our people already have.
- Invest in Timor-Leste’s most valuable resource – our people. Donors can help improve our education and health systems, and to quickly reduce malnutrition and poverty. Without a strong population, especially children and youth, we will never build a strong nation.
- Help our politicians understand that extractive industries – petroleum and mining – cannot provide enough money and jobs for Timor-Leste, and will be unable to sustain our economy and state budget. We must reduce our obsession with this fantasy, and develop an economy based on the human and renewable resources we actually have – people, agriculture, processing industries, community tourism, and other potential areas based in Timor-Leste’s own characteristics.
- Development partners should continue good initiatives to support marginalized people, including women, the rural poor, disabled people, malnourished children, and those who cannot yet access adequate education and health care. People in remote areas are often neglected, or cannot access essential services – we need to improve equity.
- We ask all donors to align their programs on climate change with their own policies. The most effective path to confront climate change is for industrialized countries to rapidly reduce their emissions. Don’t ask countries like Timor-Leste to keep adapting so that industrialized countries can continue to destroy the global climate.
- Development partners can help our Government update key information for creating evidence-based policies. For example, the most recent Demographics and Health Survey was in 2016, the Household Income and Expenditure Survey in 2011, the Living Standards Survey in 2014, and a complete Labor Force Survey in 2013.
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