16/11/2008 ABC Radio Australia - East Timor's government has denounced Fretilin opposition party claims the government will have to reduce expenditure in light of a decision by the court of appeal ruling a 400 million US budget increase illegal.
Stephanie March reports from Dili East Timor's court of appeal ruled last week that the withdrawal of money from the nation's petroleum fund beyond a sustainable amount is illegal.
It also said there was not enough detail given about the budget plan to spend up to 240 million US dollars on a stabilization fund to subsidise rice and oil.
East Timor's government spokesman Agio Pereira, however, says the government doesn't have to cancel existing contracts because the court's decision is not retroactive.
He says the government can still withdraw from the yearly budget to fund its projects.
Mr Pereira says the government has acted within the law and recent comments by the opposition Fretilin party are an abusive and malicious interpretation of the judicial decision.
Fretilin says the court ruling indicates the government has created a constitutional, institutional and financial crisis.