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.