Donors pledge $360m in new aid for East Timor

Donors pledge $360m in new aid for East Timor

Bronwyn Curran, Agence France-Presse, Dili

International donors pledged some US$360 million in new aid for poverty-stricken East Timor at the end of talks on Wednesday, meaning that a total of $440 million in assistance will be available for the first three years of independence.

East Timor will be Asia's poorest nation when it becomes independent at midnight Sunday (10:00 p.m. Sunday) and had appealed for continuing international assistance.

A statement said more than $360 million was pledged at the two-day meeting.

"In addition to $81 million already available through the Trust Fund for East Timor and the United Nations successor mission, the new country will have access to more than $440 million over the next three years (against a request of just over $400 million), including full coverage of core government budget expenditures," it said.

"We're delighted, absolutely. It's far more than what we expected," deputy foreign minister Fernando de Araujo told AFP.

The $360 million includes some $82 million in firm commitments to meet the new government's estimated budget deficit over the next three years, until taxes from offshore oil and gas projects start rolling in.

"This meeting has been successful in what it set out to achieve," the World Bank's East Asia and Pacific director, Klaus Rohland, told the closing session.

"It set out to achieve contributions for East Timor's financial needs over the next three years -- financial needs for development activities and financial needs for the financing of the core government budget."

The fledgling administration had presented a budget to donors that heavily prioritizes poverty alleviation, with 39 percent allocated to health and education spending in fiscal year 2003, increasing to 48 percent by fiscal year 2006.

Some 41 percent of the territory's 750,000 people live below the poverty line and gross domestic product per capita is $478.

East Timor is also struggling to rebuild infrastructure that was devastated by Indonesian army-backed militias after the August 1999 vote for independence from Jakarta.

Delegates from 27 countries and 15 multilateral institutions, including the International Monetary Fund and the United Nations, attended the talks.

Discussions focused on a five-year National Development Program drawn up by the government, which outlines a budgetary framework for creating economic growth and reducing poverty.

Delegates emphasized the importance of speeding up private- sector growth, investment and job creation.

International donors have given East Timor more than $1 billion since late 1999, when the UN began rebuilding the former Indonesian province from the ashes and rubble that remained after the militia rampage.

Japan has been the biggest donor so far, followed by the European Commission, Portugal, Australia and the United States.

The half-island territory spent some 450 years as a neglected Portuguese colony. Neighboring Indonesia invaded in 1975 after Lisbon's pullout.

An Australian-led peacekeeping force moved in following the militia rampage. The United Nations took over the administration in October 1999 to start rebuilding the territory and to prepare it for independence.