Subject: TL Court rules budget unconstitutional


Timor-Leste Appeals Court Invalidates State Budget

By La'o Hamutuk, 14 November 2008

On 13 November 2008, three judges of the Timor Leste Appeals Court issued a unanimous ruling regarding the $788 million mid-year budget which had been passed by Parliament and promulgated on 5 August. In response to a case brought by 16 Members of Parliament, the Court ruled as follows:

* The $240 million dollar Economic Support Fund violates Timor-Leste’s Constitutional prohibition against secret budgets (Article 145.2) and Parliament’s power to oversee budgetary operations (Articles 95.2(q) and 115(d)). * The Budget’s withdrawal of $290.7 million more than the Estimated Sustainable Income (ESI, $396.1 million) from the Petroleum Fund is illegal because it violates the 2005 Petroleum Fund Law’s requirements that petroleum resources must be managed for the benefit of current and future generations. The Government failed to meet the requirements of Articles 8 and 9 of that law to provide a detailed explanation of why it’s in Timor-Leste’s long-term interests to spend more than the ESI. * In order to preserve the certainty and security of the state, the effective date of the ruling is the date of its publication. As of that date, the Economic Stabilization Fund must stop and no money can be withdrawn above the ESI. * The court rejected plaintiffs’ arguments that parliamentary procedures and chairing during the budget debate unconstitutionally violated Parliament’s powers. * The court rejected plaintiffs’ argument that allocating 97% of the budget to the Government, with much small amounts for Parliament, President and judiciary, violates the Constitutional separation of powers.

The case was filed on 29 August by 16 Parliamentarians from the Fretilin, PUN and Kota parties.

The decision was signed by judges Ivo Nelson de Caires Batista Rosa (acting President), Cláudio Ximenes, and José Luis da Goia. Although the decision is dated 27 October, the cover letter was originally dated 11 November and has been amended to 13 November. It will likely be published in the official Journal during the week of 17 November.

The court decision (Portuguese) is at The plaintiff's filing (Portuguese) is at

Local media coverage of the court ruling has been inconsistent ­ it was a banner headline in today's Timor Post, less prominent on Diario’s front page, and not mentioned in Suara Timor-Leste or on TVTL last night.

So far, Government officials have refused to comment on the ruling, although some have suggested that the court, composed mainly of Portuguese judges and relying on Portuguese legal scholarship, does not represent Timor-Leste.

To date, the Government has withdrawn $300 million from the <file:///C:/CASWebs/lh%20sub2/Oil/PetFund/05PFIndex.htm>Petroleum Fund this year, $140 million in the third quarter and $80 million each in October and November. Although the budget unconstitutionally authorized a total withdrawal during 2008 of $686.8 million, the court’s ruling limits this to $391 million. It is not clear whether that is sufficient to satisfy the Government’s cash needs for 2008, as many budgetary commitments may not be fulfilled.

From January through September 2008, the Government had spent $218.6 million (including $14.7 million from the Economic Stabilization Fund). An additional $237.6 million has been obligated or committed.

La’o Hamutuk continues to follow this issue, and will post more information and translations as they become available.

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