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Court rules against ETimor mid-year budget

Updated 1 hour 50 minutes ago

East Timor's Court of Appeal has ruled that the $400 million mid-year budget is illegal. The government had sought to take an extra $290 million from the nation's petroleum fund than its own finance ministry had deemed sustainable. The budget had been appealed against by the main opposition Fretilin party; the court of appeal has now ruled in Fretilin's favour, and the party is now calling on the government to reassess spending for the rest of the year.

Presenter: Stephanie March Speaker: Fretilin MP Jose Teixeira * Listen: <abc.net.au/ra/programguide/stories/m1668910.asx> Windows Media

MARCH: According to East Timor's constitution, revenue from the nation's natural resources should be "used in a fair and equitable manner in accordance with national interests." In August this year the government drew wide criticism when it increased the budget by 126% to $788 million - based on funds derived from the nation's petroleum fund.

The opposition said the budget plan to allocate $240 million for an Economic Stabilisation Fund to subsidise rice, fuel and construction materials was excessive, and could lead the country down the same path as resource-cursed Nauru.

The Fretilin opposition party lodged a petition in the court of appeal, saying the budget was unconstitutional. Civil society and transparency groups agreed with the opposition. President Jose Ramos-Horta said he too was concerned that only 15 percent of the budget was allocated for capital development, and the rest was for day-to-day expenditure.

Jose Teixeira is a Fretilin MP and the party's spokesman.

TEIXEIRA: We saw a government that was spending an unprecedented amount of money, withdrawing a dangerously unprecedented amount of money from the petroleum fund which is really there not just for this generation but for future generations and for us that was just unacceptable

MARCH: The budget asked to take $291 million out of the petroleum fund beyond what the Ministry of Finance says is a sustainable amount. Now, the court of appeal has deemed that action illegal. It also says there was not adequate time given to the parliament to debate the budget and various amendments. Jose Teixeira says the government should now adjust its commitments so it has enough money to pay for essentials like wages, and community services for the rest of the financial year.

TEIXEIRA: Because there is still lots of money - in excess of $300 million - that they have just committed to. That means they have no obligation to pay yet. They can review some of those and revisit some of those.

MARCH: Jose Teixeira says there are areas where Fretilin would like to see the government cut back on spending.

TEIXEIRA: They should stop spending ludicrous amounts of money of foreign travel for members of government, which has been outrageous. They should stop spending ludicrous amounts of money on needless purchases of rice at very very high prices.

MARCH: The court of appeal says the Economic Stabalisation Fund is illegal, because it's purpose was not properly justified. Jose Teixeira says the fund's justification for a $240 million dollar fund to subsidise rice and oil is no longer valid.

TEIXEIRA: They should not spend anymore money on the ESF which was done on the premise of high rice prices and high fuel prices, well we both know that fuel prices have now fallen dramatically.

MARCH: A government spokesman said the president of parliament has received the court's decision and is now seeking legal advice. The ABC was unable to contact the parliamentary president Fernando Lasama de Aroujo for comment. But Jose Teixeira from Fretilin says the parliamentary president should act quickly as the parliament's reputation is at stake.

TEIXEIRA: What we want them is to take stock of the situation. We want the national parliament - more than the government - to take stock of the fact that this is an indictment against the national parliament, and we want them to provide an appropriate and responsible response to what has been an unprecedented criticism of the executive and legislature of this country.

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ABC Radio Australia

East Timor's government rejects Fretilin budget criticism

Updated November 16, 2008 09:05:57

East Timor's government has denounced Fretilin opposition party claims the government will have to reduce expenditure in light of a decision by the court of appeal ruling a 400 million US budget increase illegal.

Stephanie March reports from Dili East Timor's court of appeal ruled last week that the withdrawal of money from the nation's petroleum fund beyond a sustainable amount is illegal.

It also said there was not enough detail given about the budget plan to spend up to 240 million US dollars on a stabilization fund to subsidise rice and oil.

East Timor's government spokesman Agio Pereira, however, says the government doesn't have to cancel existing contracts because the court's decision is not retroactive.

He says the government can still withdraw from the yearly budget to fund its projects.

Mr Pereira says the government has acted within the law and recent comments by the opposition Fretilin party are an abusive and malicious interpretation of the judicial decision.

Fretilin says the court ruling indicates the government has created a constitutional, institutional and financial crisis.

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