Subject: AFP: Portugal reduces aid to East Timor

Source: Agence France-Presse (AFP) Date: 16 May 2002

Portugal reduces aid to East Timor

LISBON, May 16 (AFP) - Portugal's new centre-right government announced Thursday it will slash 10 million dollars in aid to former colony East Timor but will continue covering part of its debt payments.

Lisbon will reduce the amount of aid from the current 60 million dollars (65.8 million euros) per year to "just over" 50 million dollars, government spokesman Nuno Morais Sarmento said.

"The difficult situation (we are in) implies that in this area we must introduce greater rigor," he told reporters following a cabinet meeting.

But Portugal will maintain a commitment to pay 10 percent of East Timor's debt over the next three years, Morais Sarmento added.

The goverment spokesman said this measure will cost Portugal nine million dollars per year over the next three years.

Since taking office in April the Social Democrats, who are governing in a coalition with the right-wing Popular Party, have said austerity measures are needed to fight a ballooning public deficit they blame on overspending by their Socialist predecesors.

International donors pledged some 360 million dollars in new aid for poverty-stricken East Timor at the end of talks Wednesday.

The international community has given East Timor more than one billion dollars since the territory voted for independence from Indonesia in 1999.

Portugal has been one of the biggest donors so far, surpassed only by Japan and the European Commission.

East Timor will be Asia's poorest nation when it becomes independent at midnight Sunday (1500 GMT Sunday) and had appealed for continuing international assistance.

Some 41 percent of the territory's 750,000 people live below the poverty line and gross domestic product per capita is 478 dollars.

The half-island territory is struggling to rebuild infrastructure that was devastated by Indonesian army-backed militias after it voted for independence from Jakarta.

East Timor spent some 450 years as a neglected Portuguese colony. Neighbouring Indonesia invaded in 1975 after Lisbon's pullout.

The United Nations took over the administration in October 1999 to start rebuilding the territory after the militia rampage and to prepare it for independence.

ds/cml AFP

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