Understanding the 2011 budget

A version of this article was published in Tempo Semanal, in Tetum. Liga ba pajina ida ne'e iha lingua Tetum.

During the last few weeks, Timor-Leste’s politicians and journalists have vigorously debated the 2011 State Budget, as the Government was authorized to spend $1.3 billion dollars this year, twice as much as they received in the original 2010 budget. La’o Hamutuk believes that it easy to get confused by the big numbers and the partisan politics, and we have prepared two graphs (click on them to see them larger) which we hope will help readers understand what the budget actually contains.

These graphs include information about the budget execution of each Ministry during 2010, although we believe that spending money is not the main function of government. It would be easy for a Minister to steal or lose his entire budget and achieve 100% execution – but the people who require the services his or her Ministry is supposed to provide would be in serious trouble. However, budget numbers don’t contain information about the actual work done by state agencies and whether that work satisfied people’s needs and wishes – people can see that with their own eyes.

Notes

1. “Whole of Govt” includes fuel for EDTL and the Prime Minister’s “contingency fund.

2. “Other” includes all organs and ministries which were allocated less than $5 million in 2010.

Graph #1 shows the amount of money allocated to the functions of each Ministry in the final 2010 and 2011 budgets, in millions of U.S. dollars. The categories on the left part of the graph are each Ministry or organ. The right part of the graph shows some large or interesting sub-categories, including public transfers from MSS, major components of the Defense & Security and Infrastructure budgets, food security (rice imports), PDD, and the heavy oil electricity project. The heavy oil and infrastructure bars are so large that the other categories look small, but they each spent more than $5 million.

Each category contains two bars: the left hand one is 2010 and the right-hand one is 2011.

The colors in the left bar show the execution of the 2010 budget. The red part is how much money was actually spent (totaling $688 million), the green is obligations (the work associated with this has not been done or paid for, $106 million), and the white ($54 million) is money that was appropriated but not used.

The right bar shows the 2011 budget, and the colors show which part of the budget the money comes from. The vertically striped blue part is the $682 million Consolidated Fund, the normal state budget. The other two parts are the new Special Funds: brown diagonal stripes represent the $599 million Infrastructure Fund and yellow is the $25 million Human Capital Development Fund. The Special Funds are not managed by individual ministries (and although the Minister of Finance can shift their allocations from one year or project to another), but at present they are allocated to projects which fall within the competence of particular ministries. We have drawn them with each ministry to show how the 2011 budget is allocated by function. The largest allocations from the Infrastructure Fund are $447m for the national electricity project (shown with the Ministry of Infrastructure), $45m for the “MDG-suco” program to build local community housing (shown with MSS), $19m for studies related to the Tasi Mane project (shown with SERN), and $8m for the FreeBalance software program (shown with the Ministry of Finance).

This graph shows how public money was spent last year and how it will be spent this year, and illustrates where public resources will go. It is clear that investment in human and local productive capital – education, health and agriculture, gets much less money than physical infrastructure and subsidies.

Notes

1. We do not have budget execution data as of 12 November for the functions shown on the right, so we have assumed the ratio between the first and second parts of the last trimester is the same as for the relevant ministry.

2. The left-most bar represents a constant rate of spending – what it would look like if a state organ executed its entire budget, spending the same amount of money every week of the year.

Graph #2 shows when each ministry or function spent its money during 2010, as a percentage of their total budget appropriation. Each bar represents the total amount spent during the year; if they had spent the entire allocation shown in Graph 1, it would be 100%. The white lowest bar shows spending during the first trimester (January to March), the yellow bar during the next three, and the speckled orange bar during the third trimester. Since a lot of money is spent at the end of the year, we have divided the last trimester in half: The diagonally striped part is from 1 October to 12 November, and the solid dark red is from 15 November through the end of 2010.

The green line to the right of each bar shows (on the right-hand scale of 1-12) how many times faster each agency spent money during the last six weeks of 2010 than they did during the rest of the year. An uneven rate of spending could represent irregular program needs, bad planning, poor implementation or possible corruption.

This graph is based on data from the Ministry of Finance. We find it hard to believe that some ministries could spend the people’s money during Independence Day and Christmas more than five times faster than they did between January and mid-November, but we leave it to others to decide if the outcomes are good, the numbers are wrong, or the money was wasted.