2023 Amending General State Budget (OGE) Law Proposal was approved in overall terms by the National Parliament, in a plenary session on August 22^nd, 2023, with 41 votes in favour, zero against and 23 abstentions.

The law proposal includes the first amendment to Law no. 15/2022, of December 21^st, on the 2023 General State Budget and Law no. 2/2022, of February 10^th, on the Framework of the General State Budget and Public Financial Management, and the second amendment to Law no. 8/2008, of June 30^th, on the Tax Law.

With the 2023 Amending State Budget, the total expenditure of the Public Administrative Sector for 2023 will have a total consolidated value of US$ 1.77 billion. With this amendment, the authorised transfer from the Petroleum Fund drops from US$ 1.35 billion to US$ 1.21 billion US dollars.

Nearly a month on from the approval of the Government Programme, Prime Minister Kay Rala Xanana Gusmão, in his speech presenting the Law Proposal, stated that “the 9th Constitutional Government is fully committed to a fiscal policy that will lead to the country’s economic development, and that spending and revenue will be managed scrupulously and efficiently, to promote once again confidence, not only among our citizens but also among investors.”

The Head of Government explained that the law proposal was prepared based on five main aspects:

• The first relates to the changes that need to be made to the budget given the new government structure, with the changes or creation of new ministries and the reduction in the number of public institutes.

• Secondly, based on the analysis of budget execution to date and aiming to ensure the control of public spending, the government is proposing to reduce expenditure.

• The third aspect refers to the 9th Constitutional Government’s commitment to reducing inflationary pressure, which has caused significant difficulties for the population, especially the most disadvantaged, with the Government proposing to reduce the excise duty rates on sugar and customs duties on imports.

• Fourthly, given that good governance requires rigour and transparency in the execution of the General State Budget and in the management of public accounts, the government is proposing an amendment to Law no. 2/2022, of February 10th, on the Framework for the General State Budget and Public Financial Management, so that the 2024 State Budget can already begin to be prepared following the new rules. Thus, to ensure greater stability in the General State Budget and to guarantee the sustainability, rigour and transparency of public accounts, the ‘Major Planning Options’ Law will be repealed, and the Annual Strategic Investment Plan will be created to allow a path towards a vision of the Budget in line with international best practices.

• Lastly, Prime Minister explained that changes to the Tax Law are being proposed to clarify and stabilise the tax regime in force to offer greater legal certainty and fiscal stability to foreign investment.

Kay Rala Xanana Gusmão also stated that “the approval of this Budget also allows the new government structure to fulfil its mission, especially in the commitment to implement the measures planned for the first 120 days of this term,” which the Head of Government assumed in his speech when he took office. “For this reason and given that our population cannot wait any longer to feel the benefits of the policies that the government intends to implement,” the government submitted “this law proposal with a request for priority and urgency”, he added.