Framework Law for the General State Budget and Public Finance Management has been approved by the National Parliament

Wed. 12 of January of 2022, 14:46h

The National Parliament (NP), approved today, January 10th, 2022, in a final overall vote, in plenary session,  the Draft  Law 27/v/3.ª – Framework Law for the General State Budget and Public Finance Management, with 37  votes in favour, 2 abstentions and no votes against.

With this approval, the Committee C of the NP, which deals with Public Finance matters, will conclude the final wording, to submit it to his Excellency the President of  the National Parliament, before submitting it to His Excellency the President of the Republic, for analysis.

The Minister of Finance, Rui Gomes, stated that “with this approval, Timor-Leste takes the first important step within of the Public Finance Management Reform and we have managed to establish a legal framework that can address several deficiencies in the current budget regime. In this Law we will find a clear definition of Budget Perimeter concept and we will reduce the rigidity in the Budgetary Framework”.

This Budget Framework Law will replace the current Budget and Financial Management Law (LOGF – Portuguese acronym), which has been in force for over a decade. These changes are important and urgent to address to the limitations in the current LOGF. This new law will repeal Law 13/2009 (LOGF), of October 21st.

Should His Excellency the President of the Republic enact this Budget Framework Law, the Government will prepare 6 (six) diplomas to implement it.

The draft Framework Law for the General State Budget and Public Finance Management was approved in a general vote, on July 6th, 2021, followed by detailed discussion and the approval of the 125 articles on August 13th, 2021.

The Plenary Session in which the final overall vote took place was chaired by the President of the National Parliament, His Excellency Aniceto Longuinhos Guterres Lopes, accompanied by the members of the National Parliament Bureau. This Draft Law was presented and defended  by the Minister of Finance, Rui Augusto Gomes, and by the Vice Minister of Finance, Sara Lobo Brites, accompanied by the technical team from the Legal Support Office of the Ministry of Finance, as proponents.

Some additional information  

The Budget Framework Law is one of the outcomes of the long process of Public Finance Management Reform, started in 2015, by the V Constitutional Government, with previous Governments having made  a number of improvements through discussion over the  years.

This law introduces 11 budgetary principles, namely: Unity and Universality, Annuality and Pluriannuality; Budgetary Stability and Sustainability; Economy, Efficiency and Effectiveness; Transparency; Accountability; Intergenerational Equity; Budgeting by Programmes; Specification; Non-Compensation; and, finally, Non-Consignment.

Through  this Law, the Government proposes to make substantial changes in some aspects that are essential for the Budgetary Framework and for the Public Finance Management in order to  strengthen the relationship between planning and budgeting,  through budgeting by programmes, focussed on results.

Since 2015, the V Constitutional Government has already done a lot of advocacy work regarding the Fiscal Reform and Public Finance Management, through the phased implementation of programme budgeting, the elimination of the practice of off- budgeting, increased autonomy of services and improved transparency  in budget execution.

In 2019, the VIII Constitutional Government began to draft the draft Framework Law for the General State Budget and Public Finance Management, having submitted it to the NP in January 2021. During the preparation, drafting and discussing of this draft Law, the Government and the National Parliament also made  some consultations to the economic and social sectors, namely the Central Bank of Timor-Leste, the RAEOA, the National Institute of Social Security, the Audit Chamber, the Petroleum Fund Consultative Council, FONGTIL, the NGO La’o Hamutuk and the International Monetary Fund. This draft Law also includes some recommendations that have been made by the economic and social sectors, and complies with international best practices recommended by the International Monetary Fund’s article IV Mission Report and the World Bank’s Public Expenditure and Financial Accountability Review Report.

(Ministry of Finance)