Subject: Press statement Core Group on on Transparency on Economic Stabilization Fund

The Economic Stabilization Fund

The Government plans to establish a $240 million Economic Stabilization Fund to ensure that the price of food, fuel and construction materials does not spiral out of control. The money allocated for this is nearly as much as the original budget for 2008, but Parliament has not been told what it will do, how it will be managed, and by whom it will be managed. A, so far undisclosed, decree law has been passed to establish this Fund rather than a more consultative parliamentary law. Although we understand the Government wants to reduce prices of imported goods, the Fund will make the State pay for imports.

Using data from the budget document “Orçamento Rectificativo 2008” (OR2008), as presented to members of Parliament, we can work out the following:

Goods worth $182 million dollar will be imported

Outside of the money allocated to this Fund, the Ministry of Finance will pay $4.6 million in import taxes for rice[1] acquired under this Fund (explained on page 36 and 83 of the OR2008). We do not know why this expense shows up as a separate Ministry of Finance increase. Using 2.5% import tax according to the new law, when we calculate back the value of imports for this $4.6 million it comes to $184 million in imports through this fund alone over the next six months.

Goods sold against 25% of import price

The receipt out of sales of subsidized rice and other goods is anticipated to reach $39.4 million (table 4.4, OR2008). Selling imported goods worth $184 million for less than $40 million is like subsidizing 75 centavos of every dollar. Next to subsidizing rice, the Government plans to subsidize other goods like construction materials but the Mid-Year Budget Update does not talk about it. Assuming that 50% of this $184 million is used to buy rice[2], against the current subsidized price of $16 per 35-kilo bag, this comes to over 43,000 tons (43 million kg) of rice for a period of six months, or more than seven thousand tons per month. If more than 50% is used to buy rice this number only goes up.

The Fund imports twice as much as regular channels

The Government anticipates import taxes for 2008 to be $6.5 million (page 22, table 4.3, OR2008). But $4.6 million in import tax on this Fund is equal to more than 70% of total tax income. The same table hides the fact that income on import tax will actually decrease over the next years, due to lower import tariffs, even when import volumes might increase. Table 4.2 shows not only an active Fund this year but also $49.4 million in sales of rice for each year starting 2009 until 2011. That is a lot of imports. It is actually twice as much as the average yearly merchandise imports for this country over the years 2003 to 2006 (table 2, IMF Country Report June 2008). Who will manage import administration, quarantine guarantees, warehousing, transport to districts, and storage in districts? The Ministry of Tourism, Industry and Commerce is supposed to spend $3 million to build silos to store 40,000 tons of food (page 40 and 106, OR2008); where and when will they be placed, and who will manage them?

Effects of the Fund

The Fund is big, both in money it uses and in volumes it imports. We cannot say what the exact impact of the Fund will be as we do not know the mechanism behind the Fund. However, there is significant danger that buying and selling of goods through the Economic Stabilization Fund will: * Compete with existing import channels; the Fund imports volumes of rice equivalent to more than the expected[3] shortfall. All channels through which rice was normally imported (private business and food aid) will cease to exist and be replaced with a government-owned import and wholesale structure. * Compete unevenly with local markets; the uneven competition in pricing and availability will destroy any progress made in making this country more food secure. * Overwhelm local infrastructure capacity; importing volumes three times as much as normal will put a strain on existing port, customs, warehousing and administration mechanisms. Capacity for warehousing, transportation to districts and storage at district level is insufficient to manage this amount of goods. Currently, about 30,000 tons of local food production per year is lost due to pests and bad storage conditions. * Create increased import dependency and increased future budget deficits; as the budget document shows, there are anticipated sales through this Fund for future years until 2011 worth $50 million each year. Calculating back this is equal to over $200 million of new money into the Fund every year on top of total expenditure for those years (page 28, table 5.2, OR2008). This press statement has been prepared by the members of the Core Group on Transparency. Electronic copies of this statement can be obtained from the Secretariat, redetransparensia@gmail.com, or from laohamutuk.org/econ/MYBU08/RDTLMYBU08.htm

Participating organizations are:

Asosasiaun Hak

ETADEP

FONGTIL

Fundasaun Balos

La’o Hamutuk

Luta Hamutuk

Mata Dalan Institute

[1] The Orçamento Rektifikativo 2008 literally states “rice”. Page 83 and 85 of the document hint at other essential goods too.

[2] And food equivalent to milled rice

[3] Latest figures, still mostly based on existing private sector import volumes, estimate a shortfall of 80,000 tons over the whole of 2008. (Source: Ministry of Agriculture Food Security Department. “Assessment of Main Food Crops Production, And of Consumption Requirements In Timor-Leste, Season 2007 – 2008” , second draft, July 2008)

La'o Hamutuk Timor-Leste Institute for Development Monitoring and Analysis

1/1a Rua Mozambique, Farol, Dili, Timor-Leste

P.O. Box 340, Dili, Timor-Leste

Tel: +670-3325013 email: info@laohamutuk.org web:

www.laohamutuk.org 

============

Fundu Ba Estabilizasaun Ekonómika

Guvernu planeia atu estabelese osan miliaun $240 kona-ba estabilizasaun ekonómika atu nune’e bele fo’o garantia ba folin ai-han, ba folin kombustivel nomós ba material konstrusaun nia folin, atu labele ses husi kontrolu. Osan ne’ebé mak atu aloka ba ida ne’e besik hanesan ho orsamentu orijinàl ba tinan 2008, maibe Parlamentu seidauk hetan informasaun kona-ba osan ne’e atu maneja oinsá no se mak atu maneja. Konselho do Minitros pasa tiha ona Dekretu Lei ba estabelese Fundu ne’e, maibe seidauk publika, no diak liu karik Dekretu ida ne’e muda ba Lei liuhusi aprovasaun Parlamentu, ne’ebe konsultativa liu. Maske ita hotu hatene katak Guvernu hakarak reduz presu ba sasan importasaun sira, maibé liuhusi Fundu ne’e ba oin Estadu sei gasta osan barak.

Refere ba dokumentu “Orçamento Rectificativo 2008” (OR2008), ne’ebé aprezenta ba Parlamentu, tuir mai ita bele hatudu faktus hirak hanesan ne’e:

Folin sasan importasaun sei sa’e miliaun $184 resin

Alein de osan ne’ebé aloka ba Fundu ida ne’e Ministru Finansas mos sei selu osan hamutuk miliaun $4,6 ba taxa importasaun fos nian1 (esplikasaun iha pajina 36 no 83 husi OR2008). Ita la-hatene tansá maka despeza ne’e mosu iha despeza Ministeriu Finansas. Maibe, Guvernu antisipa ona katak taxa importasaun iha tinan 2008 hamutuk osan miliaun $6,5 (pajina 22, tabela 4.3, OR2008). Uza pursentu 2,5 no baseia ba nivel taxa importasaun foun, se ita kalkula fila fali milliaun $4.6 nudar osan tama taxa importasaun, ne’e hanesan miliaun $184 nudar valor total importasaun ba fulan neen tuir mai.

Faan sasan ho folin pursentu 25 husi presu importasaun

Osan ne’ebé hetan husi faan foos no sasan seluk-seluk tan ne’ebé antisipa bele sa’e miliaun $39.4 (tabela 4.4, OR2008). Faan sasan importasaun mak folin miliaun $184 ho presu menus husi miliaun $40 hanesan fo subsidíu sentavus 75 ba kada dolar ida. Subsidíu laos ba foos deit, maibe Guvernu mos planeia atu fo subsidíu ba sasan seluk tan, hanesan material kontrusaun, maibe iha Orsamentu nia laran la-koalia barak kona-ba ida ne’e. Ho hanoin ida katak pursentu 50 husi miliaun $184 ne’e atu uza para hola foos[2], nomós uza presu subsidíu ida daudaun mak foos kilograma 35 nia folin $16 saka ida, ita bele sura katak hamutuk foos tolenada 43.000 (foos kilograma miliaun 43) ida iha fulan neen nia laran. Ne’e hanesan ho fos tonelada rihun hitu kada fulan. Karik liu husi pursentu 50 sei uza ba hola foos2, nomós sei bele sa’e tan.

Importasaun husi Fundu ne’e hadalas dala rua duke importasaun bai-bain

Guvernu antisipa ba taxa importasaun iha tinan 2008 hamutuk osan miliaun $6,5 (paj.22, tabela 4.3 OR2008) Maibe, osan taxa importasaun miliaun $4,6 iha Fundu ne’e hanesan total pursentu 70 husi taxa importasaun ba sasan hotu-hotu. Iha tabela ne’e mos subar faktus katak taxa importasaun agora tuun daudaun, volume sasan sei sa’e maibe osan tama husi taxa importasaun iha tinan hirak tuir mai sei tuun. Iha tabela 4.2 hatudu katak Fundu ne’e laos para tinan ida ne’e deit, maibe ba mos faan fos hamutuk miliaun $49,4 mak kada tinan hahu husi tinan 2009 to’o tinan 2011. Se ita kalkula fila fali ida osan ne’ebé mak tama liuhusi Fundu ida ne’e, ne’e hanesan miliaun $200 nudar valor total importasaun iha kada tinan. Ida ne’e importasaun ne’ebé barak teb-tebes. Tuir lolos, faan sasan importasaun hadalas dala rua tinan ida husi importasaun regular iha nasaun ida ne’e (tabela 2, IMF Country Report, iha fulan Juñu 2008). Se los mak atu hala’o administrasaun importasaun ne’e, fo garansia ba karantina nian, armajem nian, transportasaun ba distritu nian, nomós abastesimentu iha distritu hotu-hotu? Ministeriu Turismu, Industria no Komersiu tenke hasai osan miliaun $3 para halo armajem atu nune’e bele rai ai-han tonelada 40.000 (paj. 40 no 106, OR2008); iha ne’ebé no bainhira mak sira bele rai, no se mak atu jere ida ne’e?

Efeitus husi Fundu ida ne’e

Fundu ne’e boot, hare’e husi nia valor ne’ebé uza osan nomós iha nia volume importasaun. Ita la-bele hateten saida mak efeitus realmente husi Fundu ne’e, tamba ita lahatene lolos mekanismu saida mak iha Fundu ne’e nia kotuk. Hola sasan no faan sasan husi Fundu Estabilizasaun Ekonomia ne’e perigu teb-tebes tamba bele: * Kompete ho kanal importasaun lolos; volume importasaun foos husi Fundu ne’e hanesan ka boot liu husi nesesidade volume ai-han mak ita persiza iha tinan ne’e[3]. Kanal regular importasaun foos (setor privadu ka ajuda ai-han) sei lakon no sei troka ho estrutura importasaun no faan husi Governu. * Kompete ho merkadoria lokal bai-bain laiha balansu; laiha balansu folin bai-bain no mos disponibilidade, no sei estraga progresu seguraransa ba ai-han ne’ebe iha ona iha rai ida ne’e. * Fo difikuldade ba kapasidade infrastrutura lokal nian; Halo importasaun ho volume hadalas dala tolu husi normalmente bele ha-todan iha ponte cais, alfandega, armagem, nomós ba mekanismu administrasaun nian ne’ebe iha ona. Tanba kapasidade rai sasan, muda ba distritu no abastesimentu iha nivel distritu la-to’o atu jere sasan sira ne’e. Agora deit, tonelada 30.000 foos husi produsaun lokal lakon tanba peste no kondisaun abastesimentu ne’ebé ladiak. * Kria dependênsia importasaun nomós aumenta defice orsamentu iha futuru; tuir dokumentu orsamentu ne’e hatudu katak antisipa faan sasan husi Fundu ida ne’e iha tinan oin to’o tinan 2011 nia valor hamutuk osan miliaun $50. Se ita kalkula fila fali ida osan ne’ebé mak tama liuhusi Fundu ida ne’e, ne’e hanesan miliaun $200 nudar valor total importasaun iha kada tinan. Statement ne’e perpara husi membru Rede Transparensia (Core Group Transparency). Kopia Elektronika (iha lian tetum no ingles) bele hetan hosi Sekretariadu, <mailto:redetransparensia@gmail.com>redetransparensia@gmail.com, ka hosi  laohamutuk.org/econ/MYBU08/RDTLMYBU08.htm .

Organizasaun ne’ebé mak partisipa : Asosiasaun HAK ETADEP FONGTIL Fundasaun Balos La’o Hamutuk Mata Dalan Institute

[1] husi Orçamento Rectificativo 2008 hakerek lolos “foos”. Paj. 36, 83 no 85 husi dokumen mos hakerek sasan seluk-seluk hotu.

[2] nomos ai-han ne’e lolos mak foos

[3] figura ikus mai, liu-liu bazea ba valor iha sektor privadu, estimadu iha tempu badak iha liu tonelada 80,000 iha tinan 2008 tinan tomak. (fonte : Ministeriu Agrikultura Departementu Segura Ai-han nian. “Assessment of Main Food Crops Production, And of Consumption Requirements In Timor-Leste, Season 2007 – 2008”, eskreitura segundu, fulan Julhu 2008).


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