VZCZCXRO5225
PP RUEHCHI RUEHCN RUEHHM
DE RUEHDT #0072/01 0642349
ZNR UUUUU ZZH
P R 042349Z MAR 08
FM AMEMBASSY DILI
TO RUEHC/SECSTATE WASHDC PRIORITY 3903
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHKO/AMEMBASSY TOKYO 0843
RUEHBJ/AMEMBASSY BEIJING 0084
RUEHBY/AMEMBASSY CANBERRA 1148
RUEHJA/AMEMBASSY JAKARTA 0961
RUEAIIA/CIA WASHDC
RUEHUL/AMEMBASSY SEOUL 0022
RUEHC/USAID WASHDC
RUEHDT/AMEMBASSY DILI 3330

UNCLAS SECTION 01 OF 02 DILI 000072 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EAP/RSA, EAP/MTS, EAP/RSP, EEB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EAID PREL PGOV ID
SUBJECT: TIMOR-LESTE FISCAL TRANSPARENCY FOR CONGRESSIONALLY MANDATED 
REPORT 
 
REF: STATE 16737 
 
DILI 00000072  001.2 OF 002 
 
 
¶1. (U) This cable responds to reftel request for an update on 
fiscal transparency and accountability of countries receiving 
USG assistance. 
 
Transparency of National Budget 
------------------------------- 
 
¶2. (U) Once approved by the National Parliament and promulgated 
by the President, the Government of Timor-Leste's (GOTL) annual 
budget is published in the official gazette, the Jornal da 
Repzblica.  The process for approving the budget is outlined in 
the newspaper.  The budget is also available on the Ministry of 
Finance website, www.mof.gov.tl 
 .  Efforts are made to publish 
the budget in three languages: Tetum, Portuguese, and English. 
The 2008 Parliamentary budget deliberations were carried live on 
local radio. 
 
¶3. (U) The Ministry of Finance also publishes quarterly and 
annual budget execution reports while the Banking and Payments 
Authority (BPA), Timor-Leste's quasi-central bank that serves as 
the custodian of the Petroleum Fund, publishes quarterly reports 
on the Fund's assets.  The Ministry of Finance publishes annual 
reports on the performance of the Petroleum Fund.  All of these 
are available via the internet.  As an aside, many experts agree 
that Timor-Leste's Petroleum Fund is managed in accordance with 
international best practices. 
 
Revenues and Expenditures 
------------------------- 
 
¶4. (U) All revenues and expenditures are included in the 
publicly-available budget, although foreign assistance to 
Timor-Leste is usually not well reflected in the combined 
sources budget.  The information contained in the various 
publicly available reports on revenues and expenditures is 
generally considered to be accurate, but the budget often lacks 
the level of detail necessary to understand the nature of 
Government programs.  For example, the 2008 budget includes $20 
million of transfers to be managed by the Office of the Deputy 
Prime Minister.  Much of these funds are understood to support 
internally displaced persons, but that is not specified in the 
budget itself.  Nor does the budget provide any indication of 
how the funds might be spent - e.g., additional humanitarian 
assistance, construction of transitional or permanent housing, 
cash payments, etc.  In addition, rates of budget execution are 
typically presented on a commitment rather than cash basis, and 
cash spending tends to be poorly documented. 
 
Fiscal Transparency 
------------------- 
 
¶5. (U) Weaknesses in the area of fiscal policy are generally 
attributed to the extremely limited capacity of GOTL 
institutions.  The most glaring are budget execution and 
monitoring of program implementation.  Government institutions 
simply do not have the capacity to effectively implement capital 
development projects.  Weaknesses exist at each step in the 
process: strategic planning, budgeting, project design, 
procurement, evaluation of proposals, and monitoring 
implementation.  As a result, large amounts of funds have 
historically been carried over from year-to-year.  If and how 
these carry-over funds are spent is often unclear. 
 
¶6. (U) The limited capacity of GOTL institutions is mirrored in 
Timor-Leste's civil society sector, particularly among media 
outlets.  Journalists generally lack the knowledge and skills to 
effectively utilize the budget documents that are publicly 
available and thereby provide citizens of Timor-Leste with 
objective, independent analysis and oversight of the 
Government's budget and performance.  There are few if any 
policy research organizations that might provide independent 
policy analysis to inform public debate. 
 
USG Support to Strengthen Fiscal Policies, Transparency, and 
Good Governance 
--------------------------------------------- -------------- 
----------------- 
 
 
DILI 00000072  002.2 OF 002 
 
 
¶7. (U) USAID provides support to strengthen the administrative 
capacity of justice institutions, including budget execution.  A 
Financial Management Training and Support program imparts 
financial, administrative, and management skills to members of 
the justice system, such as court administrators, finance 
officers, and administrative personnel from the Ministry of 
Justice, the Office of the Prosecutor General, the Public 
Defenders' Office, and the judiciary.  The same project also 
supported the establishment of the Provedor's Office, 
Timor-Leste's independent ombudsman, and continues to assist the 
Provedor in training staff in investigation procedures and 
anti-corruption; setting up financial and administrative 
systems; developing a complaints management process to address 
citizens' concerns; providing public education on human rights, 
good governance, and corruption prevention; and monitoring the 
human rights situation and investigating violations. 
 
¶8. (U) USAID is the leading donor supporting the development of 
an independent media sector in Timor-Leste.  USAID aims to 
improve the ability of Timorese journalists to produce and 
disseminate high quality news and expand the reach of media 
information products available to all citizens of Timor-Leste. 
This includes providing specialized journalism training on 
particular topics, including business and the economy, as well 
as efforts to further develop a culture of investigative 
journalism in Timor-Leste. 
 
¶9. (U) USAID also recently launched a program that will help 
develop Timorese professional quantitative research skills to 
conduct quality research, including public opinion surveys, 
project evaluations, community or sectoral assessments, and 
field testing public information materials, with particular 
emphasis on local governance and decentralization pilot 
projects.  For example, the project will help carry out a 
corruption perceptions survey and could be utilized to undertake 
public expenditure tracking surveys if the Government of 
Timor-Leste begins to decentralize budget authority. 
 
Assistance from Donor Countries and Multilateral Institutions 
--------------------------------------------- ---------------- 
 
¶10. (U) The Asian Development Bank (ADB), Australia, and the 
World Bank are the leading actors providing support to the 
Government of Timor-Leste to improve its rate of budget 
execution.  The ADB and Australia have placed international 
advisors in key ministries with sizable capital development 
budgets to assist with Government procurement.  The World Bank 
manages the multi-donor Planning and Financial Management 
Capacity Building Program, which aims to build Government 
capacity in budgeting, public expenditure management, and 
revenue administration.  The International Monetary Fund 
provides technical assistance to the Banking and Payments 
Authority (BPA) and advises on tax policy while Norway provides 
a number of advisors that assist with the management of the 
Petroleum Fund. 
 
¶11. (U) Timor-Leste has not volunteered for the IMF to report on 
the country's compliance with standards and codes covering 
fiscal transparency. 
KLEMM