Staff Statement by Mr. Luis Valdivieso
Advisor, Asia and Pacific Department of the IMF
Canberra, June 14-15, 2001
1. It is a great pleasure for me to represent the International Monetary
Fund in this meeting today and have the opportunity to present an overview
of our recent macroeconomic assessment, with emphasis on the sustainability
of the fiscal program for which you are being asked to provide additional
grant financing. In my remarks I will discuss the short term macroeconomic
outlook, and then advance a preliminary assessment of fiscal sustainability
and external viability in a context of an illustrative medium-term policy
framework consistent with poverty reduction.
2. Let me say at the outset that we fully share the views expressed
by previous speakers that despite the significant progress made to date,
there are important challenges ahead. The economic strategy pursued
so far has placed emphasis on emergency relief and reconstruction and
has been successful in taking the initial steps needed to ensure price
stability and creating an economic environment conducive to economic
recovery.1 The two key institutions
to manage the economy—the Central Fiscal Authority (CFA) and the
Central Payments Office (CPO) have made substantial progress and are
closer to become fully operational; the National Planning Agency is
also being developed and there is a blueprint for the creation of the
Central Statistical Office. There has also been progress in developing
and adopting important components of a basic economic regulatory and
legislative framework, particularly in the areas of budgeting and fiscal
financial management, taxation and tax administration, payments, banking
and foreign exchange operations.
3. There are several issues that remain to be addressed, however. From
the policy stand point, there is a need to address effectively valid
concerns that the public expenditure path being ingrained in the economic
system might become unsustainable over the medium term. The use of the
U.S. dollar must be deepened. The credit market needs to expand, the
labor market segmentation must be dealt with to break the coexistence
of sizable unemployment with increasing pressures on wages in urban
areas, and the land market needs to be developed. The economic institutions
must evolve further. In particular, the CFA has began strengthening
the areas of procurement and auditing, whereas the CPO is about to be
transformed into a Banking and Payments Authority, with enhanced functions
and accountability, and organizational and financial autonomy. The regulatory
and legislative framework for creating an enabling environment for private
sector development needs to be put in place rapidly, if the investment
required to achieve high and sustained growth over the medium term is
to be attracted. In particular, there is a need to reach a final decision
on the drafts and adopt the corporate law, the foreign investment law,
and the labor code. Equally important will be to develop soon a collateral
law and the land and property law.
4. Without diminishing the importance of addressing immediate issues
and problems, the approach of independence offers an opportunity to
shift the emphasis of the economic strategy from crisis management to
the promotion of high and sustainable growth as a means to reducing
the existing critical level of poverty.
Short Term Outlook
5. The macroeconomic outlook for 2001 and 2002 remains favorable,
as projected at the end of 2000. Real GDP growth is likely to remain
strong, fueled by the increase in public expenditures early this year
and the additional expansion envisaged for next fiscal year. The withdrawal
of the U.N. is bound to have an adverse impact on growth, but it could
be partially offset if the country embarks early on achieving a path
of higher growth aimed at reducing poverty. Inflation is also likely
to remain low, although some step corrections in the level of certain
prices may be experienced in connection with the expected strict enforcement
of collections on public utilities user fees. Investment is expected
to peak in 2001 reflecting a steady implementation of the reconstruction
program, but the recovery of domestic savings will take some time (Table
1).
6. The draft budget for FY01/02 is expansionary. The proposed
CFET deficit would increase from 8.4 percent of GDP in FY00/01 to 9.4
percent of GDP in FY01/02 driven by an increase in expenditure.2
CFET expenditure for FY01/02 amounts to $71 million (19 percent of GDP),3
almost a third higher than the projected outcome for FY00/01 (Tables
2 and 3 and Figure 1).
Recurrent expenditures are planned to increase by over 40 percent, largely
driven by an increase in wages and salaries. The increase in wages is
explained almost in full by the newly targeted size of the civil service
(to 14,639 up from 10,596 in FY00/01 and compared to 11,399 in the previous
forward estimate for FY01/02).4
CFET capital expenditures are expected to fall moderately.
7. CFET revenues are projected at $36 million in FY01/02, almost
a third higher than the projected outcome for FY00/01. Non-tax revenue
is projected to increase almost three-fold based mainly on an improvement
in the collection of user fees on power. Tax revenue is expected to
increase by about 40 percent, with more than half of the growth explained
by collection of taxes on ETTA agencies which until now had been de-facto
exempted. Proceeds from Timor Sea oil and gas activities are expected
to decline moderately. The total amount of revenues available to finance
next year's budget would be $31 million, as ETTA recently decided to
start using the tax component of oil and gas proceeds to support recurrent
expenditure, and to keep the production sharing component ($5 million)
in a special Timor Sea account until there is a strategy on the use
of such resources.
8. The proposed budget implies a financing gap of about $20 million
(5½ percent of GDP). In addition to revenues, there will be
a carry forward from FY00/01 of $21 million.5
Since ETTA plans to keep about $1 million as cash reserve (equivalent
to 5 days worth of CFET expenditure), this would leave $51 million available
to finance the $71 million budget. Were the budget executed in full,
by end-FY01/02, the government would still have assets in the Timor
Sea special account amounting to $8 million, but it would have run down
all its working balances with the United Nations Procurement System
(UNOPS) and reduced its cash reserves to very low levels.
9. The proposed budget poses several concerns:
On the expenditure side, the main concern is the downward
rigidity introduced by embarking on a high and self-propelling expenditure
path. Particularly worrisome is the rapidly escalating size of the civil
service. A second concern is the lack of information to form a comprehensive
view of the future recurrent implications of total public expenditure.
A third concern is the risk associated with the self-imposed reduction
in the room for managing cash outlays in the event of revenue shortfalls
or difficulties in reducing the amount of cash resources tied up by
UNOPS for procurement. Finally, there is a potential for expenditure
pressures arising from the inability of the off-budget agencies to raise
the targeted amount of user fees collections, especially in the case
of the power sector.
On the revenue side, the main concern is the heavy reliance
on administrative measures to raise revenue. While the efforts to improve
the administration merit support, particularly in the area of reducing
exemptions and improving user fees collections, the question is whether
the expectations are well founded. A decisive step to bring the UN contractors
within the tax net and for the UN to settle its payables with the power
sector would be a good signal to all taxpayers that there is the will
and a leveled field.
On the deficit financing strategy, the main concern is whether or not the decision to finance higher levels of recurrent expenditure
using non-renewable resources has taken into account long term implications
for external financing requirements. The decision on the optimal
inter-temporal allocation of non-renewable resources needs to be based
on the medium and long-term objectives of economic policy and the options
to finance the deficit. A sound deficit financing strategy needs to
simultaneously reduce the reliance on external grants, maximize the
return on the use of its non-renewable resources, and ensure that any
borrowing is consistent with the country's capacity to repay. It follows
from the above discussion that the definition of the medium and long-term
economic policy objective and the economic strategy to be pursued to
achieve it, has a significant bearing on the way to address these financing concerns
and provides a good prism through which assess the sustainability and
viability of today's policy measures.
Assessing Fiscal Sustainability and External Viability in a Poverty
Reduction Context
10. Why should poverty reduction be the overriding objective of
economic policy in East Timor? There seems to be a consensus view
that poverty incidence is extremely high in East Timor, even though
statistics on income, income distribution and poverty profiles are extremely
limited.6 Reducing poverty within
a reasonable time horizon will be without doubt the aspiration and the
biggest challenge for a number of future governments of an independent
East Timor. There is significant evidence that to reduce poverty, real
income will have to grow at high and sustained rates. The challenge
will be to move to a path of higher growth in real income that is sufficiently
fast and sustained to reduce poverty while ensuring fiscal sustainability
and external viability.
11. Determining the speed at which income needs to grow to address
poverty requires clearly defined operational targets. For example,
if the objective were to raise East Timor's per capita income from around
$400 to the International Development Agency (IDA) low income country
income threshold ($1,445 per capita) in the next 25 years, real GDP
would need to grow by at least 6-8 percent per year for the next generation,
assuming that the population grows between 1¾ to 2½ percent
per year (Figure 2, Panels I and II).7
12. To sustain real GDP growth at 6-8 percent per year for a generation,
total annual investment will need to be efficient and maintained at
high levels. In the case of East Timor, it would seem unavoidable
that the public sector will carry the initial burden of investment (including
reconstruction of basic infrastructure), while a favorable climate for
private investment is created (Figure 2, Panels II
and III). For private investment to flourish it is essential that investors
(i) develop a strong sense of internal security and political stability;
(ii) can operate within a regulatory and legislative framework that
is comprehensive, easy to administer, predictable and equitable and
which is enforced and protected by a credible institutional set-up;
(iii) can draw on capable indigenous administrative and managerial capacity
as well as an adequately qualified pool of labor; and (iv) perceive
a climate of sustained economic stability. In my presentation in Brussels
last December, I outlined the progress achieved and the challenges that
need to be addressed in each of these areas. Allow me to focus today
on the policy requirements to maintain economic stability.8
13. A sound fiscal policy stance will be critical to help maintain
macroeconomic stability, whether or not East Timor continues to use
the U.S. dollar as the legal tender. Supporting and sustaining high
growth and reducing poverty will require a total public expenditure
level consistent with the public investment program and that accommodates
the administrative structure that is being put in place today, and the
cost of maintaining the public sector capital stock. Even if total expenditure
could be contained at an average of around 25 percent of GDP (i.e.,
slightly more than half of today's total expenditures), domestic revenues
would be unlikely to rise sufficiently rapid to cover such demands on
current policies. As a result there would be pressures to use all expected
oil and gas revenues. The illustrative quantitative scenario prepared
by the Fund staff would indicate that following an initial period of
large but declining gaps, the expected oil and an gas resources9
would provide fiscal relief, but as they start declining some fiscal
gaps would tend to reappear, building up pressures for grant financing
or borrowing. The basic trend in the illustrative fiscal outlook would
not change if the revenue split between East Timor and Australia is
changed in favor of East Timor as a result of the ongoing negotiations
(Figure 2, Panel V), but it could change if other
fields in the Timor Sea were to be developed (e.g., the Sunrise Troubadour)
and benefit East Timor. More fundamentally, since there is a considerable
level of risk attached to oil and gas resources, ensuring fiscal stability
will therefore require taking very decisive steps to mobilize domestic
resources, maintain a tight rein on the level and composition of expenditure,
and adopt a prudent financing strategy.
14. Private sector investment based on an outward-looking development
strategy will be key to enhance East Timor's growth. Over the medium
term, the private sector will also face a savings-investment gap that
will need to be financed together with the possible fiscal gaps (Figure 2,
Panels IV and VI). This implies that macroeconomic policies and the
regulatory framework must be oriented towards promoting export growth
to ensure that the country has the capacity to service external public
and private liabilities. Maintaining external competitiveness
of non-oil and gas exports will rely on the adoption of a sound fiscal
policy, enhanced labor market flexibility, and the maintenance of a
liberal trade system, independently of East Timor's decision to continue to use the U.S. dollar as legal tender.
15. In closing, a newly independent East Timor government will not
only have to continue the process of reconstructing and rehabilitating
the economy but will also face serious challenges in making today's
policy decisions consistent with a policy framework needed to address
the prevailing critical poverty levels. We note with satisfaction that ETTA authorities are aware of the risks associated with the budget being
proposed for FY01/02 and that steps are being taken to address them.
Against this background, we would support the request for additional
grant financing, in the understanding that the limits of sustainability are being put to a test. ETTA authorities, and those of the future independent
East Timor, must monitor revenue and expenditure developments very closely
and should stand ready to address any deviation in the proposed expenditure
plan or shortfall in revenue with fiscal measures, not with additional
requests for financing. The level of expenditure being proposed is already
high and likely to introduce serious rigidities in expenditure management
over the medium term. To gauge such implications, a medium term policy
framework geared towards poverty reduction needs to be developed as
soon as possible. To that end a number of analytical studies and broad
information gathering to be used in decision making will be required,
and the efforts already being made in this direction should be intensified
and supported. Even on the basis of our limited knowledge, the message emerging
from an illustrative scenario is that there is no room for complacency,
and the pursuit of fiscal prudence and decisive actions to develop the
right environment for private sector activity are imperative. While
the domestic effort and the private sector response have a critical
role to play to ensure success, there will also be a need for continued
external financial assistance. The discussion on the policy and financing
options available to address the financing requirements associated with
an effort to reduce poverty is a matter that will need to be addressed
sooner rather than later, and it should be conducted jointly between
the East Timorese and all stakeholders who share their aspirations of
getting East Timor out of poverty. It will be a privilege for the IMF
to participate in such an endeavor.
Recent Economic Developments
Indicators of activity and prices are limited, but those available
signal favorable trends. The recovery initially centered on activities
associated to the international presence and reconstruction effort,
has expanded to agriculture, particularly coffee, maize and corn.
Rupiah-denominated consumer prices are rising at an annualized rate
of less than 1 percent.
Employment appears to be rising rapidly but unemployment remains
acute. The agricultural sector continues to be the main source
of employment, followed by the central administration, services and
construction. Despite reportedly sizable unemployment, the segmentation
of the labor market in the face of increasing international demand
for skilled workers has imposed upward wage pressures. Voluntary agreements
on wage restrain, specially among the NGOs, have not been binding.
Budget execution for fiscal year 2000/01 is expected to be below
target. The fiscal balance of the central administration (CFET)
10 is projected to close FY00/01
with an overall deficit of about $27 million, or 8 2/5 percent of
GDP, compared with the original budget deficit of 13 percent
(Tables 2 and 3, and Figure 1).
Overall revenue collections are projected to exceed expectations,
but the performance of individual sources of revenue has been uneven.
Domestic taxes and oil and gas fiscal revenues have been strong. Collections
of user fees on power, water, and sanitary services have been dismal.
CFET expenditures have been rising rapidly since the third quarter
of FY00/01, and will close about 7 percent below the original
budget target. This has been facilitated by improvements in procurement,
project execution, substantial expenditure reallocations, particularly
to cover defense needs, and unanticipated one-off allocations.
It is estimated that the overall public expenditure in FY00/01 (i.e.,
funded by CFET, TFET, UNTAET and bilateral sources, excluding technical
assistance) could reach $137 million, somewhat below previous estimates
(Table 4). Continued difficulties in obtaining reliable
information on bilaterally-funded expenditures, in particular, and
on the economic classification, in general, make it difficult to examine
expenditure trends in greater depth.
Financial intermediation continues to be weak. Despite
favorable trends in deposits, commercial bank credit has been
virtually negligible mainly due to the lack of adequate collateral
(Table 5). Most credit extended in East Timor comes
under the Small Enterprise Project (SEP) funded by the TFET. The interest
rate under the SEP-lending facility is 10 percent. Commercial banks'
loans to businesses range between 8.6 and 12.5, whereas consumer loans
can be obtained at 14.6-16.5 percent.
The payments system is working well and the use of the U.S. dollar
as means of payment is increasing gradually, but is still limited
compared to the Indonesian rupiah. There is an ongoing effort
to promote further the use of the U.S. dollar, including a special
program to settle the purchase of the 2001 coffee crop fully in U.S.
dollars. A licensing requirement for the importation of any foreign
currency, based on the restrictions applicable in the country of origin
of the currency to be imported, has been introduced recently.
The foreign exchange market in Dili has continued to function
relatively well. For several months, the margin between the mid-point
of the rupiah-U.S. dollar exchange rate in Dili and in Jakarta has
fluctuated within a narrow range and the spread between the buy/sell
rate of the rupiah vis-à-vis the U.S. dollar has remained stable
(Figure 3).
Trade activity continues to be dominated by the large foreign
presence. Merchandise imports have continued to grow, mostly driven
by aid-related imports. Coffee and oil and gas exports are also increasing
but less rapidly. The merchandise trade deficit is estimated to rise
from $84 million in 2000 to $131 million in 2001 whereas the current
account deficit (excluding imports associated with UNTAET and humanitarian
aid) is likely to increase from $105 million in 2000 to $176 million
in 2001 (Table 6, and Figure 4).
External financial assistance has continued to be generous. Donors
pledged $153 million for 2001 (excluding UNTAET and OCHA), of which
$81 million are to be channeled through CFET and TFET. The remaining
$72 million are expected to be allocated to bilateral aid, including
through UN agencies. By end-April 2001, TFET had obtained pledges
amounting to $167 million of which $117 million had been received,
including $35 million of promissory notes. Approximately $40
million have been disbursed. UNTAET has submitted a budget of about
$600 million, based on maintaining its presence at the current level
until June 2002. Assuming a gradual withdrawal of the UN from end-2001
onwards, the budget is likely to be around $566 million for 2001,
of which about $270 million would be spent in the second half of 2001.
About $1.5 million are budgeted to administer the elections for the
constitutional assembly to be held in August 2001. Humanitarian aid
is projected to decline to $32 million.
Work to strengthen the key economic institutions including training
of officials has continued. The CFA and the CPO have continued
to develop further. As envisaged in the original strategy recommended
by the IMF, customs collection is to be integrated into the CFA and
steps are being taken to establish a Banking and Payments Authority
(BPA) to succeed the CPO. Modest progress has been made in building
up indigenous managerial capacity in the key economic institutions.
Specialized training on macroeconomic management to ETTA officials and
general information seminars for members of the National Council have
been provided.
East Timor: Selected Indicators of Poverty Incidence,
Income Inequality, and Welfare
There seems to be a consensus view that poverty incidence is extremely
high in East Timor. The statistics available on East Timor's income,
income distribution, and poverty profiles are very limited and those
available do not permit a precise determination of the number of people
living in poverty. The little information available, however, is quite
illustrative.
Based on traditional poverty indicators,11
the incidence of poverty in East Timor was double that the average for
Indonesia. In early 1999, about 55 percent of the East Timorese fell
below the poverty line, compared to a poverty rate of 27 percent for
Indonesia.12 The poor were identified
mostly as subsistence farmers producing nontraded goods in rural areas,
where approximately 85 percent of the population live. Poverty was found
to be highly correlated with family size and lack of education.
For the last five years, income per-capita has averaged less than $400.
However, income inequality appears to be low. In 1998, the Gini coefficient
was 0.31 in East Timor, compared to 0.37 for Indonesia.13
In early 2000, the wealthiest 20 percent of households had cash incomes
that were only three times higher than the poorest 20 percent.
14
Most welfare indicators for East Timor are extremely low.15
In 1996, life expectancy was around 52 years, infant mortality rate
(per 1,000) was 149, there were 15 medical doctors per 100,000 people,
and the illiteracy rate was 50 percent (in some rural districts
the illiteracy rate was above 60 percent). It is estimated that only
25 percent of the population had access to electricity and running water.
Ongoing efforts by the National Planning Agency in coordination with
UN agencies and the IFIs to improve the understanding of poverty incidence
and prepare a poverty profile and associated surveys should be supported.
Figure 1
East Timor: Fiscal Indicators |
 |
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 |
|
|
|
|
 |
|
 |
|
Source: Data provided by the national authorities; and
Staff estimates. |
Figure 2
East Timor: Fiscal Sustainability and External Viability in a Poverty Reduction Context |
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|
 |
|
|
|
|
 |
|
 |
|
|
|
|
 |
|
 |
Source: Data provided by the national authorities; and Staff estimates.
1 Combined sources budget as defined in IMF (November 2000),
excluding net lending by TFET and the corresponding grant. Oil and gas revenue
from EKK and Bayu/Undan based on (i) a 50/50 split and (ii) a 85/15 split
between East Timor and Australia. |
Figure 3
East Timor: Indonesian Rupiah/U.S. Dollar Exchange Rate Developments in Dili,
2000-01 |
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|
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|
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|
 |
|
 |
|
Sources: Central Payments Office, Dili; and Bloomberg. |
Figure 4
East Timor: External Indicators |
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|
 |
Source: Data provided by the East Timor authorities; and Staff estimates.
1 Excludes UNTAET support of quasifiscal expenditures. |
|
Table 1. East Timor: Key Economic
Indicators, 1998 - 2002 |
|
|
|
Est. |
|
Est. |
|
Proj. |
|
Proj. |
|
|
|
1998 |
1999 |
|
2000 |
|
2001 |
|
2002 |
|
| GDP (in millions of U.S. dollars)1 |
390 |
245 |
|
290 |
|
344 |
|
407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Real GDP growth |
-2 |
-38 |
|
15 |
|
15 |
|
15 |
|
| Inflation rate (CPI, Dili, based on rupiah prices) |
80 |
140 |
|
20 |
|
... |
|
... |
|
| Inflation rate (CPI, Dili, based on U.S. dollar
prices) |
... |
... |
|
... |
|
3 |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In percent
of GDP) |
|
|
|
|
|
|
|
|
|
|
|
| Consumption |
74.4 |
92.1 |
|
118.0 |
|
119.4 |
|
109.7 |
|
|
|
|
|
|
|
|
|
|
|
|
| Investment |
47.0 |
28.2 |
|
18.1 |
|
33.7 |
|
23.6 |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic Saving |
25.6 |
7.9 |
|
-18.3 |
|
-18.0 |
|
-6.9 |
|
|
|
|
|
|
|
|
|
|
|
|
| External Savings |
21.4 |
20.3 |
|
36.4 |
|
51.7 |
|
30.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In percent of GDP) |
|
|
|
|
|
|
|
| Money and credit |
|
|
|
|
|
|
|
|
|
| Broad money |
38.7 |
29.92 |
|
... |
|
... |
|
... |
|
| Currency |
4.5 |
5.92 |
|
... |
|
... |
|
... |
|
| Demand deposits |
6.4 |
6.72 |
|
7.3 |
|
9.03 |
|
... |
|
| Quasi money |
27.8 |
17.32 |
|
... |
|
1.73 |
|
... |
|
| Domestic assets (net) |
36.8 |
26.12 |
|
... |
|
... |
|
... |
|
| Interest rates (percent) |
38.5 |
36.02 |
|
|
|
|
|
... |
|
| onlending |
|
|
|
10.02 |
|
10.02 |
|
|
|
| consumer
loans |
|
|
|
... |
|
14.6-16.52 |
|
|
|
| business
loans |
|
|
|
... |
|
8.6-12.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of U.S. dollars) |
|
|
|
|
|
|
|
| Exports |
54 |
49 |
|
16 |
|
30 |
|
38 |
|
| Imports4 |
142 |
89 |
|
100 |
|
161 |
|
130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Accounts |
|
|
|
|
2000
Jan/Jun |
|
2000/015
Fiscal Year |
|
2001/025
Fiscal Year |
|
|
|
(In percent of GDP) |
|
|
|
|
|
|
|
| Fiscal Accounts of Consolidated Fund for East Timor
(CFET) |
|
|
|
|
|
| Revenues |
|
|
|
1.2 |
|
8.6 |
|
9.7 |
|
| Total Expenditures |
|
|
|
3.4 |
|
17.0 |
|
19.2 |
|
| Recurrent Expenditures |
|
|
|
3.4 |
|
13.3 |
|
16.7 |
|
| Capital expenditures and net lending |
|
|
|
0 |
|
3.7 |
|
2.5 |
|
| Overall balance (deficit) |
|
|
|
-2.2 |
|
-8.4 |
|
-9.4 |
|
|
|
|
|
|
|
|
|
| Combined Sources Budget6 |
|
|
|
|
|
|
| Revenues |
|
|
|
1.2 |
|
8.6 |
|
9.7 |
|
| Total Expenditures |
|
|
|
18.8 |
|
42.7 |
|
46.7 |
|
| Recurrent Expenditures |
|
|
|
4.4 |
|
22.6 |
|
24.4 |
|
| Capital expenditures and net lending |
|
|
|
14.4 |
|
20.1 |
|
22.3 |
|
| Overall balance (deficit) |
|
|
|
-17.6 |
|
-34.0 |
|
-36.9 |
|
|
|
|
|
|
|
|
|
Sources: UNTAET and Indonesian authorities; and
IMF staff estimates.
1
GDP in U.S. dollars was calculated using 1996 as the base year and
assuming constant purchasing power parity exchange rate.
2 In 1999, figures shown
are for end-September. Interest rates onlending relate to loans
extended under the Small Enterprise Project funded by the TFET.
Consumer and business interest rates are for end-April 2001.
3 As of end April. Excludes deposits held by residents
in Indonesian banks previously operating in East Timor.
4 Includes imports through foreign aid and 5 and 6 percent
of OCHA and UNTAET imports, respectively.
5 The fiscal year is from July 1 to June 30.
6 Includes CFET, TFET, a fraction of UNTAET's assessed
contribution budget, and bilateral contributions. |
Table 2. East
Timor: Fiscal Accounts of the Consolidated Fund for East Timor (CFET)
(In millions of U.S. dollars unless otherwise indicated)
|
|
|
2000 (Jan./Jun.)
|
2000 / 01
|
2001 / 02 1
|
|
|
Prel. Budget |
Act. |
Rev. Act. |
Budget |
Nov. Rev. |
Est. |
Org. |
Nov. Rev. |
Budget |
| Revenue |
4.3 |
3.6 |
1.6 |
17.0 |
25.1 |
27.9 |
30.0 |
26.0 |
36.0 |
| Domestic revenue |
4.3 |
1.6 |
1.6 |
15.0 |
19.1 |
15.2 |
... |
22.0 |
25.0 |
| Direct taxes |
0.5 |
0.0 |
0.0 |
1.0 |
2.1 |
0.2 |
... |
3.0 |
2.0 |
| Income
and wage withholding tax |
... |
... |
... |
... |
2.0 |
0.0 |
... |
3.0 |
2.0 |
| Presumptive
profit tax on coffee export 2 |
... |
0.0 |
0.0 |
1.0 |
0.1 |
0.2 |
... |
0.0 |
0.0 |
| Indirect taxes |
1.8 |
1.5 |
1.5 |
10.0 |
12.0 |
12.0 |
... |
14.0 |
15.0 |
| Border
taxes |
... |
1.5 |
1.5 |
7.0 |
10.0 |
10.0 |
... |
12.0 |
13.0 |
| Import
duties |
... |
0.5 |
0.5 |
... |
... |
... |
... |
... |
... |
| Excises |
... |
0.5 |
0.5 |
... |
... |
... |
... |
... |
... |
| Sales
tax |
... |
0.5 |
0.5 |
... |
... |
... |
... |
... |
... |
| Service
tax |
... |
... |
... |
3.0 |
2.0 |
2.0 |
... |
2.0 |
2.0 |
| Non tax (charges
and user fees) |
2.0 |
0.1 |
0.1 |
4.0 |
4.0 |
2.0 |
... |
4.0 |
7.0 |
| Other |
... |
0.0 |
0.0 |
... |
1.0 |
1.0 |
... |
1.0 |
1.0 |
| Timor Sea 3 |
... |
2.0 |
0.0 |
2.0 |
6.0 |
12.7 |
... |
4.0 |
11.0 |
| Production
sharing |
... |
... |
... |
... |
... |
3.0 |
... |
... |
5.0 |
| Taxes |
... |
... |
... |
... |
... |
9.7 |
... |
... |
6.0 |
|
|
|
|
|
|
|
|
|
|
|
| Expenditure |
16.0 |
11.0 |
4.6 |
59.2 |
60.8 |
55.0 |
55.3 |
57.0 |
71.0 |
| Recurrent expenditure 4 |
10.0 |
10.0 |
4.6 |
43.6 |
45.5 |
43.0 |
45.6 |
47.3 |
61.7 |
| Wages
and salaries |
2.7 |
... |
... |
14.3 |
16.5 |
13.9 |
... |
17.7 |
23.3 |
| Goods
and services |
0.3 |
... |
... |
27.3 |
29.0 |
21.9 |
... |
29.6 |
33.9 |
| Other |
7.0 |
... |
... |
2.0 |
0.0 |
7.2 |
... |
... |
4.5 |
| Capital expenditure |
6.0 |
1.1 |
0.0 |
15.6 |
15.3 |
12.0 |
9.8 |
9.8 |
9.2 |
|
|
|
|
|
|
|
|
|
|
|
| Overall balance |
-11.7 |
-7.4 |
-2.9 |
-42.2 |
-35.7 |
-27.1 |
-25.3 |
-31.0 |
-35.0 |
|
|
|
|
|
|
|
|
|
|
|
| Float ("+" = outstanding payments) |
... |
-0.1 |
0.0 |
... |
... |
... |
... |
... |
... |
|
|
|
|
|
|
|
|
|
|
|
| Financing |
|
7.5 |
2.9 |
29.8 |
35.7 |
27.1 |
1.8 |
-1.8 |
15.0 |
|
|
|
|
|
|
|
|
|
|
|
| Non-grant financing
( '-' = increase) |
... |
-3.6 |
-5.6 |
... |
-6.7 |
-11.9 |
1.8 |
-1.8 |
8.6 |
| Change
in CFA claims on CPO |
... |
-1.6 |
-1.6 |
... |
-2.7 |
-11.6 |
1.8 |
2.2 |
12.3 |
| Change
in Timor Sea special account |
... |
-2.0 |
0.0 |
... |
-4.0 |
-3.0 |
... |
-4.0 |
-5.0 |
| Change
in UNOPS account |
... |
0.0 |
-4.0 |
... |
0.0 |
2.7 |
... |
0.0 |
1.3 |
|
|
|
|
|
|
|
|
|
|
|
| Grant financing 5 |
... |
11.2 |
8.6 |
29.8 |
42.4 |
39.0 |
... |
... |
6.4 |
| From
UNTF New York |
... |
11.2 |
8.6 |
29.8 |
28.4 |
26.1 |
... |
... |
6.4 |
| Additional
contributions |
... |
... |
... |
... |
14.0 |
12.9 |
... |
... |
... |
|
|
|
|
|
|
|
|
|
|
|
| Financing gap |
... |
0.0 |
0.0 |
12.5 |
0.0 |
0.0 |
23.5 |
32.9 |
20.0 |
|
|
|
|
|
|
|
|
|
|
|
| Memorandum items: |
|
|
|
|
|
|
|
|
|
| Nominal GDP |
... |
133 |
132.6 |
324 |
324 |
324 |
370 |
370 |
370 |
| Cumulative grants received |
... |
39.5 |
41.1 |
... |
41.8 |
54.0 |
54.0 |
54.0 |
54.0 |
| CFET assets (end-of-period) |
... |
31.9 |
36.5 |
... |
10.4 |
24.0 |
... |
12.2 |
9.0 |
| CFA claims
on CPO |
... |
1.6 |
1.6 |
... |
4.4 |
13.3 |
... |
2.2 |
1.0 |
| UNTF balance
(New York) |
... |
28.3 |
30.9 |
... |
0.0 |
6.4 |
... |
0.0 |
0.0 |
| Timor Sea special
account |
... |
2.0 |
0.0 |
... |
6.0 |
3.0 |
... |
10.0 |
8.0 |
| UNOPS balance |
... |
0.0 |
4.0 |
... |
0.0 |
1.3 |
... |
0.0 |
0.0 |
| Number of public servants |
... |
... |
... |
9,035 |
11,154 |
10,596 |
10,035 |
11,399 |
14,639 |
| Average monthly wage (U.S. dollars) |
... |
... |
... |
132 |
... |
... |
... |
129 |
133 |
| Fiscal sustainability |
|
|
|
|
|
|
|
|
|
| Gap in percent
of revenue |
... |
... |
... |
73.4 |
-0.1 |
0.0 |
78.4 |
126.4 |
55.5 |
| Gap in percent
of expenditure |
... |
0.0 |
0.1 |
21.1 |
0.0 |
0.0 |
42.5 |
57.6 |
28.1 |
|
Capital expenditure
in percent of expenditure |
... |
9.8 |
0.0 |
26.4 |
25.1 |
21.8 |
17.6 |
17.1 |
13.0 |
|
Source: Central Fiscal Authority; and Fund staff
estimates.
1For FY01/02, the CFA has moved off-budget the power sector, the
airport, and the port. For comparability with previous years' presentation,
revenue and expenditure are reported on a gross basis here. This
is done by adding the amount of retained revenue ($6.1 million)
to the CFA's revenue and expenditure figures. See also footnote
4.
2 As of January 1, 2001, the coffee export tax has been
abolished and coffee production has become subject to the income
tax.
3 After the November 2000 revision, the CFA decided to
count Timor Sea revenue of $2 million against FY00/01 rather than
Jan/Jun 2000.
4 The retained revenue of $6.1 million is added 50/50
to the net figures for wages and salaries and goods and services.
The unappropriated amount of $4.5 million is reported as 'Other'.
5 For FY 00/01 assumes that all pledges in the Donors'
Meeting in Lisbon will be disbursed. |
Table 3. East
Timor: Fiscal Accounts of the Consolidated Fund for East Timor (CFET)
(In percent of GDP, unless otherwise indicated) |
|
|
2000 (Jan./Jun.)
|
|
2000 / 01
|
|
2001 / 02 1
|
|
|
Prel. Budget |
Act. |
Rev. Act. |
|
Budget |
Nov. Rev. |
Est. |
|
Org. |
Nov. Rev. |
Budget |
| Revenue |
... |
2.7 |
1.2 |
|
5.3 |
7.8 |
8.6 |
|
8.1 |
7.0 |
9.7 |
| Domestic revenue |
... |
1.2 |
1.2 |
|
4.6 |
5.9 |
4.7 |
|
... |
5.9 |
6.8 |
| Direct taxes |
... |
0.0 |
0.0 |
|
0.3 |
0.6 |
0.1 |
|
... |
0.8 |
0.5 |
| Income
and wage withholding tax |
... |
... |
... |
|
... |
0.6 |
0.0 |
|
... |
0.8 |
0.5 |
| Presumptive
profit tax on coffee export 2 |
... |
0.0 |
0.0 |
|
0.3 |
0.0 |
0.1 |
|
... |
0.0 |
0.0 |
| Indirect taxes |
... |
1.1 |
1.1 |
|
3.1 |
3.7 |
3.7 |
|
... |
3.8 |
4.1 |
| Border
taxes |
... |
1.1 |
1.1 |
|
2.2 |
3.1 |
3.1 |
|
... |
3.2 |
3.5 |
| Import
duties |
... |
0.4 |
0.4 |
|
... |
... |
... |
|
... |
... |
... |
| Excises |
... |
0.4 |
0.4 |
|
... |
... |
... |
|
... |
... |
... |
| Sales
tax |
... |
0.4 |
0.4 |
|
... |
... |
... |
|
... |
... |
... |
| Service
tax |
... |
... |
... |
|
0.9 |
0.6 |
0.6 |
|
... |
0.5 |
0.5 |
| Non tax (charges and user
fees) |
... |
0.1 |
0.1 |
|
1.2 |
1.2 |
0.6 |
|
... |
1.1 |
1.9 |
| Other |
... |
0.0 |
0.0 |
|
... |
0.3 |
0.3 |
|
... |
0.3 |
0.3 |
| Timor Sea 3 |
... |
1.5 |
0.0 |
|
0.6 |
1.9 |
3.9 |
|
... |
1.1 |
3.0 |
| Production sharing |
... |
... |
... |
|
... |
... |
0.9 |
|
... |
... |
1.4 |
| Taxes |
... |
... |
... |
|
... |
... |
3.0 |
|
... |
... |
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expenditure |
... |
8.3 |
3.4 |
|
18.3 |
18.8 |
17.0 |
|
14.9 |
15.4 |
19.2 |
| Recurrent expenditure 4 |
... |
7.5 |
3.4 |
|
13.5 |
14.1 |
13.3 |
|
12.3 |
12.8 |
16.7 |
| Wages and salaries |
... |
... |
... |
|
4.4 |
5.1 |
4.3 |
|
... |
4.8 |
6.3 |
| Goods and services |
... |
... |
... |
|
8.4 |
9.0 |
6.8 |
|
... |
8.0 |
9.2 |
| Other |
... |
... |
... |
|
0.6 |
0.0 |
2.2 |
|
... |
... |
1.2 |
| Capital expenditure |
... |
0.8 |
0.0 |
|
4.8 |
4.7 |
3.7 |
|
2.6 |
2.6 |
2.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Overall balance |
... |
-5.6 |
-2.2 |
|
-13.0 |
-11.0 |
-8.4 |
|
-6.8 |
-8.4 |
-9.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Float ("+" = outstanding payments) |
... |
-0.1 |
0.0 |
|
... |
... |
... |
|
... |
... |
... |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financing |
... |
5.7 |
2.2 |
|
9.2 |
11.0 |
8.4 |
|
0.5 |
-0.5 |
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-grant financing ( '-' = increase) |
... |
-2.7 |
-4.3 |
|
... |
-2.1 |
-3.7 |
|
0.5 |
-0.5 |
2.3 |
| Change in CFA claims on CPO |
... |
-1.2 |
-1.2 |
|
... |
-0.8 |
-3.6 |
|
0.5 |
0.6 |
3.3 |
| Change in Timor Sea special account |
... |
-1.5 |
0.0 |
|
... |
-1.2 |
-0.9 |
|
... |
-1.1 |
-1.4 |
| Change in UNOPS account |
... |
0.0 |
-3.0 |
|
... |
0.0 |
0.8 |
|
... |
0.0 |
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Grant financing 5 |
... |
8.4 |
6.4 |
|
9.2 |
13.1 |
12.1 |
|
... |
... |
1.7 |
| From UNTF New York |
... |
8.4 |
6.4 |
|
9.2 |
8.8 |
8.1 |
|
... |
... |
1.7 |
| Additional contributions |
... |
... |
... |
|
... |
4.3 |
4.0 |
|
... |
... |
... |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financing gap |
... |
0.0 |
0.0 |
|
3.9 |
-0.0 |
0.0 |
|
6.4 |
8.9 |
5.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Memorandum items: |
|
|
|
|
|
|
|
|
|
|
|
| Nominal GDP (In millions of U.S.
dollars) |
... |
133 |
133 |
|
324 |
324 |
324 |
|
370 |
370 |
370 |
|
Source: Central Fiscal Authority; and Fund staff
estimate.
1 For FY01/02, the CFA has moved off-budget
the power sector, the airport, and the port. For comparability with
previous years' presentation, revenue and expenditure are reported
on a gross basis here. This is done by adding the amount of retained
revenue ($6.1 million) to the CFA's revenue and expenditure figures.
See also footnote 4.
2 As of January 1, 2001, the coffee export tax has been
abolished and coffee production has become subject to the income
tax.
3 After the November 2000 revision, the CFA decided to
count Timor Sea revenue of $2 million against FY00/01 rather than
Jan/Jun 2000.
4 The retained revenue of $6.1 million is added 50/50
to the net figures for wages and salaries and goods and services.
The unappropriated amount of $4.5 million is reported as 'Other'.
5 For FY 00/01 assumes that all pledges in the Donors'
Meeting in Lisbon will be disbursed. |
Table 4. East Timor:
Combined Sources Budget 1
(In millions of U.S. dollars unless otherwise indicated) |
|
|
2000 (Jan./Jun.)
|
|
2000/01
|
|
2001/02 2
|
|
|
Prel. Budget |
Rev. Act. |
|
Budget |
Nov. Rev. |
Est. |
|
Nov. Rev. |
Proj. |
| Revenue (CFET) |
4.3 |
1.6 |
|
17.0 |
25.1 |
27.9 |
|
26.0 |
36.0 |
| Tax |
2.3 |
1.6 |
|
11.0 |
14.1 |
12.2 |
|
17.0 |
17.0 |
| Non-tax |
2.0 |
0.1 |
|
4.0 |
5.0 |
3.0 |
|
5.0 |
8.0 |
| Timor Sea 3 |
... |
0.0 |
|
2.0 |
6.0 |
12.7 |
|
4.0 |
11.0 |
|
|
|
|
|
|
|
|
|
|
|
| Expenditure |
48.2 |
24.7 |
|
171.8 |
175.8 |
137.0 |
|
136.0 |
165.2 |
| Recurrent |
10.0 |
5.9 |
|
43.6 |
45.5 |
73.1 |
|
47.3 |
90.2 |
| CFET |
10.0 |
4.6 |
|
43.6 |
45.5 |
43.0 |
|
47.3 |
61.7 |
| TFET 4 |
... |
1.3 |
|
... |
... |
8.1 |
|
... |
9.3 |
| UNTAET 4 |
... |
... |
|
... |
... |
10.8 |
|
... |
0.0 |
| Others 4 |
... |
... |
|
... |
... |
11.1 |
|
... |
19.2 |
| Capital |
38.2 |
18.9 |
|
128.2 |
130.3 |
63.9 |
|
88.8 |
75.0 |
| CFET |
6.0 |
0.0 |
|
15.6 |
15.3 |
12.0 |
|
9.8 |
9.2 |
| TFET 4 |
32.2 |
1.3 |
|
69.1 |
56.2 |
32.6 |
|
63.5 |
37.0 |
| UNTAET 4 |
... |
3.0 |
|
2.5 |
13.5 |
2.7 |
|
... |
0.0 |
| Others 4 |
... |
14.6 |
|
41.0 |
45.3 |
16.7 |
|
15.5 |
28.7 |
|
|
|
|
|
|
|
|
|
|
|
| Net lending |
0.0 |
0.2 |
|
0.0 |
7.3 |
1.1 |
|
7.5 |
7.5 |
| TFET |
... |
0.2 |
|
... |
7.3 |
1.1 |
|
7.5 |
7.5 |
| Others |
... |
... |
|
... |
... |
... |
|
... |
... |
|
|
|
|
|
|
|
|
|
|
|
| Balance |
-43.9 |
-23.3 |
|
-154.8 |
-157.9 |
-110.2 |
|
-117.5 |
-136.7 |
|
|
|
|
|
|
|
|
|
|
|
| Float ("+" = outstanding payments) |
... |
0.0 |
|
... |
... |
... |
|
... |
... |
|
|
|
|
|
|
|
|
|
|
|
| Non-grant financing ( '-' = increase) |
... |
-5.6 |
|
... |
-6.7 |
-11.9 |
|
-1.8 |
8.6 |
| Change in CFA claims on CPO |
... |
-1.6 |
|
... |
-2.7 |
-11.6 |
|
2.2 |
12.3 |
| Change in Timor Gap account |
... |
0.0 |
|
... |
-4.0 |
-3.0 |
|
-4.0 |
-5.0 |
| Change in UNOPS account |
... |
-4.0 |
|
... |
0.0 |
2.7 |
|
0.0 |
1.3 |
|
|
|
|
|
|
|
|
|
|
|
| Balance to be financed by grants |
-43.9 |
-28.9 |
|
-154.8 |
-164.7 |
-122.2 |
|
-119.4 |
-128.1 |
|
|
|
|
|
|
|
|
|
|
|
| Grant financing (flows) |
... |
28.9 |
|
142.3 |
164.7 |
122.2 |
|
86.5 |
108.1 |
| UNTF (including direct contributions)
5 |
... |
8.6 |
|
29.8 |
42.4 |
39.0 |
|
... |
6.4 |
| TFET |
... |
2.8 |
|
69.1 |
63.5 |
41.8 |
|
71.0 |
53.8 |
| UNTAET |
... |
3.0 |
|
2.5 |
13.5 |
13.5 |
|
... |
0.0 |
| Others |
... |
14.6 |
|
41.0 |
45.3 |
27.8 |
|
15.5 |
47.9 |
|
|
|
|
|
|
|
|
|
|
|
| Financing gap |
... |
0.0 |
|
12.5 |
-0.0 |
... |
|
32.9 |
20.0 |
|
|
|
|
|
|
|
|
|
|
|
| Memorandum items: |
|
|
|
|
|
|
|
|
|
| Nominal GDP |
... |
133 |
|
324 |
324 |
324 |
|
370 |
370 |
| In percent of GDP |
|
|
|
|
|
|
|
|
|
| Revenue |
... |
1.2 |
|
5.3 |
7.8 |
8.6 |
|
7.0 |
9.7 |
| Recurrent expenditure |
... |
4.4 |
|
13.5 |
14.1 |
22.6 |
|
12.8 |
24.4 |
| Capital expenditure
and net lending |
... |
14.4 |
|
39.6 |
42.5 |
20.1 |
|
26.0 |
22.3 |
| Overall balance |
... |
-17.6 |
|
-47.8 |
-48.8 |
-34.0 |
|
-31.8 |
-36.9 |
| Fiscal sustainability |
|
|
|
|
|
|
|
|
|
| Gap in percent of
expenditure |
... |
0.0 |
|
7.3 |
-0.0 |
... |
|
24.2 |
12.1 |
| Grants in percent
of revenue (incl. grants) |
... |
94.6 |
|
89.3 |
86.8 |
81.4 |
|
76.9 |
75.0 |
| Recurrent expenditure
in percent of expenditure |
20.7 |
23.7 |
|
25.4 |
25.9 |
53.3 |
|
34.8 |
54.6 |
|
Sources: Central Fiscal Authority, Donor Coordination
Unit, World Bank, UNTAET; and Fund staff estimates.
1 The consolidated public sector includes the
Consolidated Fund for East Timor (CFET), the Trust Fund for East Timor
(TFET), expenditure funded by bilateral donors, and selected items from
the UNTAET assessed contribution budget.
2 For FY01/02, the CFA has moved off-budget the power sector,
the airport, and the port. For comparability with previous years' presentation,
revenue and expenditure are reported on a gross basis here. This is done
by adding the amount of retained revenue ($6.1 million) to the CFA's revenue
and expenditure figures.
3After the Nov. revision, the CFA decided to count Timor Sea
revenue of $2 million against FY00/01 rather than Jan/Jun 2000.
4ncludes only items which would be continued by an East Timorese
government. Expenditure is classified into recurrent and capital based
on discussions with the authorities and the World Bank.
5 For FY 00/01 assumes that all pledges in the Donors' Meeting
in Lisbon will be disbursed. |
Table 5. East Timor:
Financial System Operations
(End period stock; in millions of U.S. dollars)
|
|
|
Sep.1999 |
Jun. 2000 |
Dec. 2000 |
Apr. 2001 |
| I. Central Payments Office |
|
|
|
|
|
|
|
|
|
|
| Net Foreign Assets |
... |
1.6 |
19.1 |
16.8 |
| of which: cash in vault |
... |
0.0 |
1.4 |
4.4 |
| claims
on domestic banks |
|
1.6 |
3.0 |
4.6 |
|
|
|
|
|
|
| Net Domestic Assets |
... |
-1.6 |
-19.1 |
-15.1 |
| ETTA (net position) |
... |
-1.6 |
-16.0 |
-13.4 |
| Capital and reserves |
... |
0.0 |
-0.7 |
-1.0 |
| Other |
... |
0.0 |
-2.5 |
-0.7 |
|
|
|
|
|
|
| Liabilities |
... |
0.0 |
0.0 |
1.7 |
| Private enterprises |
... |
0.0 |
0.0 |
1.2 |
| Financial Institutions |
... |
0.0 |
0.0 |
0.5 |
|
|
|
|
|
|
| II. Commercial Banks 1 |
|
|
|
|
|
|
|
|
|
|
| Net Foreign Assets |
-5.6 |
13.7 |
14.9 |
31.5 |
| of which: cash holdings |
... |
4.2 |
5.0 |
7.3 |
| liabilities
to the CPO |
|
1.6 |
3.0 |
4.6 |
|
|
|
|
|
|
| Net Domestic Assets (NDA) |
59.3 |
-1.0 |
2.2 |
5.6 |
|
|
... |
|
|
|
| Loans and Advances |
16.8 |
-0.0 |
0.2 |
1.1 |
| Other NDA 2 |
44.5 |
-1.0 |
2.0 |
4.5 |
|
|
|
|
|
|
| Deposit Liabilities 3 |
53.7 |
12.8 |
17.1 |
37.1 |
| Current Deposits |
15.0 |
12.1 |
16.4 |
30.9 |
| Saving Deposits |
24.7 |
0.0 |
0.0 |
2.1 |
| Time Deposits |
14.0 |
0.6 |
0.7 |
4.1 |
|
|
|
|
|
|
| Memo Items |
|
|
|
|
| TFET onlending facility to small enterprises |
0.0 |
0.2 |
1.5 |
2.7 |
|
Sources: Central Payments Office, Indonesian authorities;
and IMF estimates.
1 Figures for 1999 are not strictly comparable
to 2000 and 2001 figures. In 1999, figures reflect the position of eight
Indonesian banks as of September 30, 1999, as reported by the Indonesian
authorities. The figures for 2000 reflect the position of the Banco Nacional
Ultramarino (BNU), the only bank operating in East Timor in that year.
Figures for 2001 also include the operations of ANZ. There is no information
on the position of the Indonesian banks previously operating in East Timor.
2 April figure includes banks' claims on CPO for $0.5 million.
3 Excludes CPO deposits on behalf of the CFA, but includes
those of UNTAET, which reached $6.1 million in April 2001. |
| Table 6. East Timor:
Balance of Payments (1998-2002) |
|
|
1998 |
1999 |
2000 |
2001 |
2002 |
| (In millions of U.S. dollars) |
|
|
|
|
|
|
|
| Current account excl. official transfers |
-119 |
-56 |
-105 |
-176 |
-117 |
| Current account incl. official transfers |
-19 |
-5 |
-105 |
-176 |
-117 |
|
|
|
|
|
|
|
| Trade balance |
-88 |
-40 |
-84 |
-131 |
-92 |
| Exports of goods |
54 |
49 |
16 |
30 |
38 |
| Oil
and gas |
0 |
1 |
5 |
13 |
9 |
| Other |
54 |
48 |
11 |
17 |
30 |
| Imports of goods |
142 |
89 |
100 |
161 |
130 |
| Foreign-aid
related 1 |
50 |
26 |
58 |
103 |
59 |
| East
Timor budget |
47 |
23 |
21 |
63 |
42 |
| Bilateral |
3 |
3 |
37 |
39 |
17 |
| Other
2 |
92 |
63 |
42 |
58 |
70 |
|
|
|
|
|
|
|
| Services (net) |
-32 |
-16 |
-21 |
-47 |
-33 |
|
|
|
|
|
|
|
| Income (net) |
0 |
0 |
0 |
1 |
6 |
|
|
|
|
|
|
|
| Current transfers |
100 |
52 |
0 |
0 |
1 |
|
|
|
|
|
|
|
| Capital and financial account |
10 |
9 |
121 |
163 |
86 |
|
|
|
|
|
|
|
| Capital account |
0 |
12 |
142 |
202 |
115 |
| UNTAET and Humanitarian
1 |
0 |
12 |
30 |
30 |
13 |
| Consolidated Fund
for East Timor (CFET) 3 |
0 |
0 |
42 |
14 |
0 |
| CFA funds with UNOPS |
0 |
0 |
-13 |
13 |
0 |
| Trust Fund for East
Timor (TFET) 4 |
0 |
0 |
22 |
73 |
62 |
| Bilateral 5 |
0 |
0 |
61 |
72 |
39 |
|
|
|
|
|
|
|
| Financial account |
10 |
-3 |
-21 |
-39 |
-28 |
|
|
|
|
|
|
|
| CPO Reserves (increase -) |
0 |
0 |
-19 |
3 |
-11 |
| Of which: East Timor Gap Account
|
0 |
0 |
-3 |
-8 |
-10 |
|
|
|
|
|
|
|
| Errors and omissions |
10 |
-4 |
3 |
0 |
0 |
|
|
|
|
|
|
|
| Overall Balance |
0 |
0 |
0 |
-10 |
-41 |
|
|
|
|
|
|
|
| Financing gap |
0 |
0 |
0 |
10 |
41 |
|
|
|
(In percent of GDP, unless otherwise indicated) |
|
|
|
| Memorandum items: |
|
| GDP at current market prices (in millions
of US$) |
390 |
245 |
290 |
344 |
407 |
| Trade balance |
-22.4 |
-16.4 |
-29.1 |
-38.0 |
-22.5 |
| Current account excl. official transfers |
-30.5 |
-22.9 |
-36.3 |
-51.2 |
-28.8 |
| Current account incl. official transfers |
-4.9 |
-1.9 |
-36.3 |
-51.2 |
-28.8 |
| Merchandise exports |
13.9 |
19.9 |
5.4 |
8.8 |
9.4 |
| Merchandise imports |
36.3 |
36.3 |
34.5 |
46.8 |
31.9 |
| CPO reserves (in millions of US$) |
0.0 |
0.0 |
19.1 |
15.9 |
26.5 |
|
Source: UNTAET, and IMF staff estimates
1 OCHA-led humanitarian aid and the UNTAET
assessed budget are both presented net of estimated associated imports.
2 It is assumed that about 50 percent of the net foreign exchange
gain from foreign aid transfers is spent by the private sector on imports.
3 CFET financing gap not assumed to be covered.
4 Assumes that TFET project commitments beyond the US$ 166
million pledged in Lisbon will be fully funded.
5 Includes project disbursments by bilaterals routed through
UN agencies. |
Figure 1
East Timor: Fiscal Indicators |
|
|
|
|
|
|
|
|
|
|
|
|
|
Source: Data provided by the national authorities; and
Staff estimates. |
Figure 2
East Timor: Fiscal Sustainability and External Viability in a Poverty Reduction Context |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source: Data provided by the national authorities; and Staff estimates.
1 Combined sources budget as defined in IMF (November 2000),
excluding net lending by TFET and the corresponding grant. Oil and gas revenue
from EKK and Bayu/Undan based on (i) a 50/50 split and (ii) a 85/15 split
between East Timor and Australia. |
Figure 3
East Timor: Indonesian Rupiah/U.S. Dollar Exchange Rate Developments in Dili,
2000-01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources: Central Payments Office, Dili; and Bloomberg. |
Figure 4
East Timor: External Indicators |
|
|
|
|
|
|
|
|
|
|
|
|
Source: Data provided by the East Timor authorities; and Staff estimates.
1 Excludes UNTAET support of quasifiscal expenditures. |
1 Appendix I
presents an overview of recent developments.
2 The CFET primary deficit (defined
as current revenues minus non-interest recurrent expenditures) would
increase from about 5.6 percent of GDP in FY00/01 to about 8.3 percent
of GDP in FY01/02.
3 The draft budget approved by ETTA
sets expenditures for $65 million, but this figure includes only net
transfers to three agencies that have been moved off-budget: the power
authority, the airport, and the port. The agencies are allowed to retain
$6 million in projected user fees collections to cover additional expenditures.
Consistent with previous years' presentation, the expenditure and revenues
of these agencies are presented in gross terms.
4 If Cabinet decides to implement
a civil service wage reform, the wage bill could increase by another
$0.8 million (which is the amount set aside in the budget for such reform).
5 The calculation of the size of
the carry over for FY01/02 assumes that all $14 million in donors pledges
made in Lisbon and ratified in Brussels will be disbursed by year-end.
However, as of end-May 2001, only $4 million had been disbursed.
6 Appendix II
presents a few indicators that are very illustrative.
7 The low population growth estimate
has been prepared by the Central Board of Statistics of East Timor Province
(BPS) for the period 1993-98, whereas the higher-end is quoted Arneberg
and Pedersen (1999) as corresponding to the average for the 1990s.
8 Maintaining stability requires
sound macroeconomic policies and well-functioning and efficient markets
for goods and factors of production as these provide the mechanism to
transmit the effect of policies. The factor markets which require immediate
attention are credit, labor and land.
9 As projected by the operators
of the Elang Kakatua and Bayun-Undan fields and based on the existing
production sharing arrangements.
10 The central administration includes
both recurrent and capital expenditure funded by the Consolidated Fund
for East Timor -(CFET)-but it excludes reconstruction expenditure funded
by the Trust Fund managed by the World Bank-(TFET)-and directly by bilaterals.
11 Traditional
poverty indicators are based on a poverty line approach which uses data
on household consumption to estimate the proportion of people who are
unable to meet the cost of basic needs. This approach does not capture
important dimensions of poverty, such as access to education, civil
liberties, freedom from discrimination, and people's ability to live
long and healthy lives.
12 For 1999, estimates
of the poverty line in East Timor vary from Rp 53,000 per month (Indonesian
Bureau of Statistics (BPS)) to Rp 91,235 per month (M. Pradhan, A. Suryahadi,
S. Sumarto, and L. Pritchett (2000), "Measurements of Poverty in
Indonesia: 1996, 1999, and Beyond", SMERU Working Paper, June).
For 2000, preliminary estimates of the poverty line vary from Rp 70,000
per month to Rp 100,000 per month (for a review of the different estimates,
see Initial Poverty Assessment: East Timor, Asian Development
Bank, in cooperation with East Timor Transitional Administration, September
2000).
13 Pedersen
and Arneberg (editors), 1999. The Gini coefficient is a measure of inequality
derived from the Lorenz curve. The closer the Gini coefficient is to
zero, the more equal are incomes; the closer it is to one, the more
unequal are incomes.
14 See AsDB,
2000.
15 Pedersen and Arneberg
(editors), 1999, and World Bank, Joint Assessment Mission (JAM) Report,
available via internet: http://wbln0018.worldbank.org/eap/eap.nsf.
|
