Budget 2008 Highlights
A Guide to the Budget
10 December 2007
THE GENERAL BUDGET OF THE STATE
The total budget proposed for 2008 is US$ 347.3 million. By category of expenditure, the budgets are:
Total recurrent expenditures are US$ 279.3 million (80%) while capital and development expenditures are US$ 68.0 million (20%).
The estimated sustainable income from petroleum revenues for the Budget 2008 is US$ 294 million.
The General Budget of the State will be financed from the following sources:
THE COMBINED SOURCES BUDGET
The total combined sources budget is US$ 537.3 million, US$347.3 million (65%) from the General Budget of the State and US$ 190.0 million (35%) funding confirmed by donors. Donors contribute a little more than 1/3 of the total combined sources budget.
The combined sources budget, shared by the various sectors:
Total revenue is estimated at US$1.385.6 billion shared by US$1.358.6 billion from petroleum revenue and US$27.0 million from domestic revenue including revenue generated by self-funded agencies. The whole of state fiscal balance (revenue less expenditure) is estimated at US$ 1.038.3 billion.
BUDGET 2008 PRIORITIES
ADMINISTRATIVE REFORM AND STABILIZATION
2008 will be a continuation of reform (started from the transition period July to September 2007) to guarantee the return of Timor-Leste to the path of development and to meet the Millennium Development Goals (MDGs). The focus will be on building the capacity of the Government to deliver services to the people.
A new career regime for the civil service will be implemented in 2008. This regime will promote efficiency and provide opportunities for career development and progression.
Government ministries and services will be regularly audited and clear administrative policies will be developed aimed to ensure that funds are spent transparently and represent good value for money.
Financial reports and information made more readily (sic)
The Government will introduce reforms to the taxation system in 2008. The reform will lead to improving Timor-Leste's competitiveness in the region.
As a result of the implementation of the tax reform, domestic tax revenues are expected to decline by 50%. Some of the reforms are as follows:
Wages income tax
Dividends and interest will no longer be subject to with-holding tax, but must be included in gross income to calculate a taxpayer's taxable income.
Rate of service tax will be cut from 12% to 5%, and the provision of motor vehicle rental services will no longer be subject to service tax.
The rate of income tax for resident and non-resident natural persons (individuals) with a permanent establishment in Timor-Leste, will be 0% for the first US$6,000 of taxable income and then 10% on the excess.
For all other taxpayers (non-individuals), the rate will be 10% on all taxable income. 1% minimum income tax will no longer be payable.
INVESTMENT STRATEGY OF THE PETROLEUM FUND
According to Article 14.3 of the Petroleum Fund Law, the range of instruments included as qualifying instruments in the Law shall be reviewed by the Government, and approved by the Parliament, at the end of the first five (5) years of the Petroleum Fund existence, having regard to the size of the Petroleum Fund and the level of institutional capacity. The Government will start this review process in 2008.
An amount of US$63.9 million is budgeted for Public Transfers to provide personal benefits payments to veterans. The Government will also provide public grants to the church, NGOs and civil society groups who will help implement government programs in areas such as education, sport, training and research. Some of the activities which will be funded from these transfers are:
By Ministry, the public transfers are:
Through the Secretary of State for Gender Equality, the Government will:
The capital development programme of 2008 (US$68.0 million) is a modest but realistic plan. Capital expenditure in 2006-2007 was US$11.6 million. Government expects to execute a major part of the budget of US$68.0 million for 2008 as well as the carryovers from FY 2006-2007 and previous years.
The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)