GDP rollercoaster

Care of the IMF. Hold on tight

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Once you’ve seen Paris

Consulting the literature on aid effectiveness, in relation to Timor, I am little surprised to see basically nothing. Since the heralded Paris Declaration in 2005 (which Timor was a party to), much attention has focused on the way countries receive and give aid.

The Declaration states that countries should “own” the aid they receive by exercising effective “leadership” using strategic approaches and good planning. On their side, donor countries have a responsibility to “harmonise” the array of projects and funds on offer to receiving governments. (Timor has not participated in either of two surveys intended to monitor progress of the implemention of the Paris Declaration.)

Within NGO and policy circles, over the past year some scrutiny has been applied to how these principles are being implemented (or not). This in preparation for a big meeting in Accra called the “High Level Forum on Aid Effectiveness” in September.

On the face of it, one might think, right, Timor is rich, the oil money is flowing in… The state budget can be fully funded by transfers from the Fund… tell the donors to take a walk! (But it’s clearly not that simple.)

Oil revenues started kicking in significantly in 2005 and 2006. In the 2006/07 budget, the government planned to spend $316 million of its own money, and spend $136 million of donor money. This was already a great leap from $142/$105 million respectively of 2005. So in 2006, the Fretilin government was willing to try to execute 30% more donor funding, even though it was going to have to more than double execution of its own budget.

Perhaps we can understand the continued need for donor money, even in an oil-money-saturated year like 2006/7. Much of this donor funding was(is) actually going to salaries for Advisers and highly trained professionals within key ministries.

One of the things that most made an impression on me during my brief trip to Timor in June was the issue of donor funding and foreign advisors in the AMP government.

Until this Supplemental Budget of June 2008, the state budgets have contained a part called the “Combined Sources” budget which show by Ministry how much money is from the Timor-Leste state budget and how much is coming from donor governments. A quick read through the budget of 2008 reveals some rather striking features, that call into question Timorese “ownership” and donor “harmonisation.”

The major “service providing” ministries (Education, Health and stretching it a bit, Agriculture and Social Solidarity) have rather wide ranging ratios of donor vs. RDTL monies.

  • Agriculture — 0.80
  • Health — 0.74
  • Social Solidarity — 0.71
  • Education — 0.29

Social Solidarity seems to have a high ratio because of the Recovery Strategy, which involves food distribution and housing programmes to benefit those affected by the crisis in 2006. Agriculture and Health have high ratios of donor funds to RDTL funds which would appear to require a great deal of coordination and harmonization with the government’s own plans.

Just to give a taste, Agriculture deals with eight programmes around or over $1 million from Australia, the Bank, EC (x2), Germany, US (x3) as well as five programmes under $150,000 from miscellaneous minor donors including Brazil, Portugal and Spain. So some key Ministries are clearly kept busy with the work of liaising, implementing and reporting to donors to implement programmes. Is aid money being “harmonized”? Is Agriculture “owning” these programmes?

On the other end of the spectrum is the Ministry of Finance, which does not implement in the sense that it is not out working in the field on poverty reduction. The MoF, in fact, is probably trying to keep a handle on all aid on offer, going in and out state coffers, and trying to deal with all of the political exigencies in relation to planning, budgeting and budget execution. And there we see the impact of the “Advisers” on the budget — the ratio is very skewed towards donor funds. That is, RDTL spends $8 million of its own, and accepts $31 million in donor funding, all of which is for “recurrent expenses” (i.e. salaries for foreign advisers, called “capacity building”).

I have probably presented a highly simplistic vision of aid in the 2008 budget — please challenge me if I’m way off the mark. But I would really like to flag up the importance of some thinking on how aid influences (positively and negatively) the way government operates in Timor. It would be fascinating to see a study of aid effectiveness in three “moments” in Timor’s young history (1) Fretilin without oil revenue (2) Fretilin with oil revenue (3) AMP with oil revenue.

Selling

In the past 24 hours:

First, I found this item on Ebay.

I periodically track what priceless East Timorese artefacts are being peddled from Bali and Australia. In the past, I have seen rattan sticks (known as rota in parts of East Timor) for sale. The most seemingly valuable items to be fair seem to originate from Atoni regions of West Timor.

It is hard to say how much of what is bought and sold is, or was, of importance to communities — more than mere vulgar decorative items. (For that matter, how much was stolen from East Timor in 1999.)

This particular carving is allegedly from Ataúro, and I am venturing a guess that it was more than decorative; it had some kind of transcendent value to a community for a period during the twentieth century.

The issue, it seems, is not so much that a particular item is bought and sold, it is the question of who has the right to sell. And where are the profits (hundreds of dollars!) going.

After, I read Lusa’s interview with Ramos Horta. The President explains why he feels perfectly justified in pardoning the last remaining militia convicted for crimes against humanity in 1999. He calls militia commander Marques um palerma, um desgraçado (which I would translate as “a chump, a pathetic guy”).

He says that “The best way to honor the dead is to create a free, peaceful and prosperous country, so we can say that so much sacrifice was not in vain.”

Reading that line, I think the operative word is prosperous. I go back to the same questions I ask about the artefacts on Ebay: who has the right to “sell” what belongs to the community? And who benefits from this prosperity?

Foos for thought

One major gap in Timorese historiography, among many, is a study of the periods of hunger documented in the past two centuries and imports of food stuffs. Plenty of data exists in the colonial archives, and even in the Boletim Oficial de Timor online.

I remember reading fascinating documents in Lisbon describing the negotiations by American agency Catholic Relief Services with the fascist regime, asking for permission to feed Timorese people during a famine in the 1960s.

Word is, on the eve of my departure last week, that the government struck its deal to import enough (and more) rice per month to get through a potential food crisis and give rice to civil servants and FDTL. In the end, the food security (or sovereignty, depending on your point of view) issue remains the domain of malai advisers and a few at a Council of Ministers level able to make big decisions. Who knows what the massive importation of rice will do to local producers. (The government claims it is going to contract a company to buy haree, unprocessed rice, at elevated prices from farmers, then process and sell at subsidized prices.)

But it’s unlikely Timorese rice producers ever had enough of a say to pressure governments for less importation and more attention to internal markets.

I came across this fascinating passage from Azorian [correction: Australian of Portuguese descent] writer J. Chrys Chrystello’s “East Timor: The Secret File 1973-75“, where he describes May 1973 (before the oil crisis of October)

In addition, during May the new Head of the Department of Economy, Dr. Henrique Chagas de Jesus is inaugurated to what will soon become the most inflation-ridden chapter of the Timorese economy. Spiralling costs provoke generalised alarm, and in the midst of the crisis, the absolute incompetence of Dr. Jesus is compounded with additional dosages of improvised measures. Rice rots in the Suai area (South Coast), and emergency shipments are brought in from Singapore and Australia at prices ten times higher.