18 April 2009

Minister of Finance calls for an end to the politicisation of Public Finance

Democratic Republic of East Timor
Ministry of Finance

Dili- April 13, 2009

Media Release

Minister of Finance calls for an end to the politicisation of Public Finance

Statement of response
"It is of great concern when the reform of the Ministry of Finance becomes part of a political agenda," responded the Minister of Finance, Ms. Emilia Pires, who is not affiliated with any political party and was the target of Fretilin's propaganda this week. These tactics could be seen as bullying by one or more political parties to influence an outcome, which is a dangerous precedent when it comes to public finance. It does not scare me, my staff or the donors and will not deter or influence us to act in any other way than with absolute integrity and within the law. The facts presented in the Fretilin media releases this week are false and misleading. Political persecution of advisors or staff, either contracted by the donors or the State, should not be an accepted practice by any political party. "

In media statements dated December 16, 2008 and reissued April 2, 2009, Fretilin attacked international advisors, three in particular, all contracted and hired under the PFMCBP (Public Finance and Management Capacity Building Program). The PFMCBP is a five year coordinated program of targeted capacity building in planning and financial management funded by various donors including the World Bank, from which both national and international advisors are contracted and paid.

Far from what is reported, of the 48 long-term and short-term consultants currently contracted, only 15 are Australian. Australia is the biggest contributor to the funds to support this technical assistance and has always been a major supplier of highly qualified advisors, some of East Timorese descent.

A very small number of short term advisory roles that fall outside the PFMCBP, such as the Petroleum Advisory Board appointed under the Petroleum Fund Act, are paid for under the State budget. All salaries are paid in line with international standards. No payment of $80,000, as alleged by opposition, 'for one month' was made. Information on expenditures from the State Budget is provided in the public accounts when submitted each June as required by law.

Additionally, The MoF has imposed clear standards to ensure the integrity of recruitment within a transparent and objective selection process which cannot be influenced by external factors or political interference. The panel is chaired by Liborio Pereira, Director General of the Civil Service Commission and is made up of seven members, five are Timorese and there are no political appointees on the panel. The role of the selection panel is to qualify individuals for the most senior positions in the Ministry of Finance based on merit, qualifications, experience, technical competence, applicable training, skills, performance evaluations and other professional criteria.

The recent invitation to apply for management roles in the Ministry of Finance closed on March 20 and no applicants received after that date were considered.

There was an administrative error by staff in compiling the short list of qualified candidates listed on the website March 26. The error was publicly recognized and within 24 hours rectified with the final list as approved by the panel, posted on March 27, 2009. Those candidates have already proceeded to the second phase of selection, a written exam.

Until qualified Timorese candidates are identified for senior management roles, the MoF must put in place individuals competent to assume responsibility for complex portfolios. Mr. Graham Daniel is one such advisor charged with overseeing Revenue and Customs until the time an appropriate candidate for Director General can be appointed. The appointment of Directors General will only occur after a fair and equitable selection process has been completed. Mr. Daniel served under UNTAET in an equivalent position in 2001-2002.

Mr. Daniel has since been publically humiliated and embarrassed after being accused in National Parliament of mistreating and verbally abusing a staff member. In fact, the incident is the subject of a ministerial inquiry, under review by an internal panel, involving a staff member's refusal to provide information to Daniel, after a direct request by the Minister.

Liborio Pereira, Director General of the Civil Service Commission, noted "Director General roles are considered highly prestigious, but if our country is to move forward we must appoint on merit. There can never be any level of political interference or intimidation."

In a bid to further discredit the highly respected Minister of Finance, Fretilin once again republished the accusation of "13 million missing". The money was not missing but monies "advanced" for purposes approved under the State Budgets of 2007 and 2008. At the time, the amount was in fact 6 million and all line ministries had until March to account for the cash advances with the MoF.

The public accounts for 2008 have since been reconciled and submitted to the national Parliament on 31st March 2009 as the law requires. The fully audited version will be tabled at the end of June, again as per legal requirement.

Minister Pires noted "It is preposterous to represent advances, for purposes approved and funded under the state budget, as "missing money". It was a complete misrepresentation of the facts and a bit ridiculous the media fell for the political propaganda without checking the facts with the MoF first.'

'I will also not allow political posturing to discount the excellent work we, as a Ministry, have achieved and it is due to the collective efforts of all the staff and advisors of the MoF who work tirelessly, often under difficult circumstances." Significant reforms to the MoF have led the way to record improvements. The IV Constitutional Government budget execution rates have been the highest recorded since independence, a 283.6% percent increase from 2006/ 2007. The Government managed to execute more in 1.5 years than all former Governments combined over the previous five years. The nation has seen an unprecedented 12% growth despite the global economic crisis.

Spending on Health, Education and Agriculture has doubled in 2008 and minor and major capital development increased by an impressive 339%.

The reforms to the tax system saw a 44% increase from 2007 in the total number of tax payers. Direct taxes increased by 46%, business taxes increased by 56% and taxes collected from non-Government individuals increased by 29% demonstrating improved systems result in increased revenue , with a some 30% increase in customs revenue from 2006.

The latest round of attacks on the Minister coincided with the annual Timor-Leste Development Partners Meetings where 47 international donors pledged their support to the nation. The Gusmao Government was repeatedly congratulated for its performance during the 2008 year. The United Nations Special Representative reminded everyone that the Secretary General Banki Moon stated in February this year that the Government of Timor-Leste had achieved more than what the international community had believed possible. ENDS

For More Information, Please contact: Ines Almeida +670 723 0032

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