Execution of the 2021 General State Budget reaches 23.7% and execution of Essential Programs reaches 19%

Mon. 07 of June of 2021, 15:00h

The execution performance of the 2021 General State Budget, in general terms, is divided into two categories: (i) Good Governance and Institutional Management Programme, with a total budget allocation of USD$456.7 million and (ii) Essential Programs of the various entities, with a total budget allocation of USD$1.5 billion. The final total of the amending budget allocated to these two categories is USD$2.1 billion.

By Friday, June 4th, 2021, the actual execution rate of the 2021 GSB reached USD$ 480.3 million, or 23.7% of the total budget of USD$ 2.1 billion. The actual execution rate for the Good Governance and Institutional Management Programme, which aims to support the State machine, was 33%, with USD$150.6 of the USD$456.7 million already executed. The actual execution rate for the category of Essential Programs of the entities was 19%, that is, USD$ 296.9 of the allocated USD$ 1.5 billion was already executed.

This rate of execution is considered low, because we are already entering the third month of the second quarter. This situation was caused by the evolution of the COVID-19 outbreak, which forced the Government of Timor-Leste to impose sanitary fences and compulsory confinement, thus limiting the movement of people and goods.

The highest execution rate in each expenditure category corresponds to the Public Transfers category, with 39%, followed by Salaries and Wages, with 35%, Goods and Services, with 14%, and Minor Capital, also with 14%. The Capital Development category, on the other hand, an important category for creating jobs and generating employment in the country, has an execution rate of only 5.6%.

According to estimates, the execution rate will continue to increase in the third and fourth quarters, as this is traditionally the period when infrastructure projects begin to be executed. As of May 7th, 2021, the National Procurement Commission (NPC) has conducted procurement tender processes for 107 projects, with a total budget of USD$565.4 million. For most of these projects, the respective procurement processes have already been initiated, and some are already in their final stages, so, according to the schedule, they will be completed within this year.

The COVID-19 Special Fund, created last year to respond to the pandemic, as of Friday, June 4th, 2021, had reached an actual execution of USD$55.3 million, or 19%. There were changes in these percentages, since the Ministry of Finance has just made a transfer of USD$22.6 million to the National Institute of Social Security, for the 6 (six) socio-economic measures, the payment of which it will make in the coming weeks, in accordance with the First Amendment to Law 14/2020, on the 2021 GSB.

Execution by the ministerial lines

The Tourism and Agriculture sectors, considered essential to create jobs and generate economic growth in the country, by May 31st, 2021, had an actual budget execution rate of 13% (MTCI) and 12% (MAP), respectively.

There are some ministerial lines whose execution rates are quite good, as is the case of the Ministry of Public Works, the Ministry of Petroleum and Minerals, the Ministry of State Administration and the Ministry for the Affairs of National Liberation Combatants. In most of these cases, execution is higher in the category of public transfers, as is the case with public transfers made by these Ministries to Public Enterprises under their responsibility.

Revenue’s Execution

The execution on the revenue side, until May 31st, 2021, reached USD$60.4 million, or 32% of a total estimated revenue of USD$187.1 million. The reason for this relatively low execution rate is due to the fact that the Government has postponed the payment of taxes to the end of July, due to the current situation, which has led to businesses losing revenue and income. The Government's decision to postpone these payments obviously has implications for revenue execution.

Regarding withdrawals from the Petroleum Fund, up until April 2021, the Government has withdrawn USD$ 350 million, or 25% of the total of USD$ 1.3 billion approved by the National Parliament. The Government will submit a third withdrawal request as soon as there is a need to reinforce the State's cash balance.

Execution at the Municipal Level

Although the execution rate in Central Government is considered low, the execution rate of the General State Budget 2021 at the municipal level is showing good results. In 8 municipalities, the execution is very good, namely in the municipalities of Lautém, Ainaro, Manufahi, Bobonaro, Aileu, Ermera, Liquiçá and Manatuto. Of these 8 municipalities, Lautém is the best performing, with an actual execution rate reaching 32%. This good execution rate helps the policies of the 8thConstitutional Government, led by His Excellency the Prime Minister, General Taur Matan Ruak. These decentralized services, and their execution, are led by the Ministry of State Administration.

The Ministry of Finance would also like to add that, according to Government Decree No. 1/2017, of January 9th, related to the Execution of the 2017 General State Budget, as of that year, seventy-five percent (75%) of the budget execution process is decentralized to ministerial lines. It is only twenty-five percent (25%) of the budget execution process that has the participation and involvement of the Ministry of Finance. Therefore, each of the ministerial lines should execute its budget, according to the approved program and activities, to contribute to the growth of the national economy.

Regarding Autonomous Agencies and Municipalities, the budget execution process is 100% decentralized, which means that Autonomous Agencies and Municipalities make all payments directly to bank accounts of the beneficiaries, except for salaries and wages.