ALIGNING PRS REPORTING WITH DOMESTIC REPORTING

PROCESSES

Francisco Sa Benevides

Vice Ministers for Agriculture , Flores and Fisheries

And

Antonio Freitas

Director of Budget Timor Leste

Forum National Plans and PRSP East ASIA

April 4-6 2006 Vientiane Lao PDR

CONTENTS

I BackgroundII The Budget in Timor-LesteThe Budget in Timor-Leste systemIII Linking the budget to programmed IV Capacity Constraints

V Making Adjustment

Map of East Timor 

I Background

• Timor – Leste has a population of 1,000,000 people in an area of 14609.38 square kilometers. It is made up of 13 Districts, 64 Sub districts and 442 Villages

• In the referendum of 1999 the people of Timor Leste voted to separate from Indonesia

• Timor Leste became the first new nation of the 21st century on 20 May 2002, after four centuries of colonial rule and a quarter century of occupation and conflict

Some basic features

• mainly agrarian nation76% of inhabitants live in rural areas.

• poverty line per person estimated US$16.50 per month or $ 0.55 per day (calculated in September 2001)

• Natural resources include oil fields (Timor Sea), coffee, forests (some sandalwood), possibly some minerals, mountains and sea

Demographics

Total Population : approx 1.000.000 people

• 80 % Original

• 10 % Indo Portugal

• 5 % Chinese

• 5 % Other’s

ReligionReligion

• 90 % Catholic

• 6,5 % other Christian

• 1 % Muslim

• 1 % Hindu

• 0,5 % Other or no specified religion

II. The Budget in Timor-LesteII. The Budget in Timor-Leste

• The Ministry of Planning and Finance is responsible for public expenditure management for the Democratic Republic of Timor Leste.

• The Budget Office is responsible for delivering the national budget.

• The budget office establishes and maintains an efficient and timely combined sources budget that supports Government's national priorities within a sustainable medium term fiscal framework that is prepared and managed by national staff.

Components of Total Public Sector Expenditure in Timor-Leste

CFET

TFET UN

NGO’sBi-

Multilateral

The State Budget (CFET Budget)

Government of Timor-

Leste

User Fees & Charges

Domestic Tax

Timor Sea Tax

Royalties & Interest

CSP Support

Self Funding Fees

Cash Balances

$.....

Salary and Wages

Goods and Services

Minor Capital

Capital & Develop’t

Petroleum

Fund

Budget and Planning Cycle

3. National Parliament reviews CoM recommendations

1. Preparation of agency budget proposals

2. Budget Review Committee and CoM

5. Agency spending/ Treasury oversighting

4. Appropriation

8. National Parliament reviews CoM recommendations

7. Budget review CoM

6. Budget review – agency budget proposalsOctober/November

9. Supplementary appropriation

Budget and Planning Cycle

• The Government’s planning and budget cycle commences in November when we establish fiscal envelopes.

• Ministries submit their budget submission and draft annual action plans for analysis by the Budget and Planning Departments.

• A sub committee of the Council of Ministers called the Budget Review Committee (BRC) is established.

Budget and Planning Cycle

• The BRC reviews each submission looking at the draft annual plan, and current budget execution. The Budget and Planning Departments prepare a “green brief” to inform the BRC about issues in the submission.

• Following on from the BRC the Budget Department provides the Council of Ministers with a draft budget for their consideration and approval.

• This is then presented to a) development partners at the Timor-Leste Development Partners Conference , and b) the National Parliament for consideration.

III. LINKING THE BUDGET TO PROGRAMMES

• In Timor-Leste the appropriations are provided on a Division/Programmed basis. For example in the Ministry of Agriculture, Forestry and Fisheries, money is appropriated to the livestock division which runs the livestock programmed, fisheries division which runs the fisheries programmed.

• The annual action plans are also developed by division. In this way we link the budget with the annual action plan

• The Government receives Quarterly reporting on the annual action plans and also receives quarterly updates (which go to the National Parliament) on Budget Execution.

IV. CAPACITY CONSTRAINTS

• There is a need to improve the staff’ understanding of their annual action plans and linking these to the general targets from the National Development Plan and the Millennium Development Goals.

• There is also a need to improve familiarity with the financial system of the Government. This means better understanding the budget and planning process, the procurement process and the Treasury process.

V. MAKING ADJUSTMENTS

• We implement the budget in July. We review our revenue position twice a year, to inform the Government and the National Parliament. On this occasion we take the opportunity to adjust the expenditure for any further urgent needs

( For example last year we sent a number of Timorese students to Cuba to learn medicine but we had no budget for their costs of living, this was an example of an unforeseen occurrence which needed to be accommodated).