Portuguese escudo front-runner as Timor currency
Portuguese escudo front-runner as Timor currency
DILI, East Timor (Reuters): The Portuguese escudo has strengthened its position as a contender to become the currency of an independent East Timor.
Portugal's Banco Nacional Ultramarino this week became the first bank to open a branch in Dili since the territory was ravaged by pro-Indonesian militias in the wake of August's vote for independence.
State-owned Ultramarino's presence as a conduit for pensions and civil service salaries will make the escudo the most widely circulated currency after the unpopular Indonesian rupiah.
"The escudo will be very well accepted in East Timor because it was the currency before the Indonesian invasion and we have spoken to the people and they said they wanted it," said Rui Silva, the deputy head of the Commission of Portugal to East Timor.
The escudo has been widely touted as a possible currency for East Timor, a former Portuguese colony, and although some East Timorese leaders have expressed a preference for the currency, no final decision has been made.
An official of the U.N. Transitional Administration in East Timor (UNTAET) ruled out keeping the Indonesian rupiah.
"Keeping the rupiah as legal tender is not really an option because it not a particularly stable currency and the people do not want it," said David Harland, UNTAET's acting head of governance and public administration.
"What we will be looking for in a currency is stability and the degree to which intervention by the state would have a ripple effect."
Portugal has said that it will pay the salaries of civil servants for the next few months to help speed East Timor's transition to independence.
Even before the opening of the Portuguese bank in Dili, Portugal had also been paying pensions to former members of its army and other state employees via an Indonesian bank.
An Ultramarino official said most banking services were available, including foreign currency deposits, but said it would not be extending loans for the time being.
East Timor has no functioning system of civil law and property title disputes arising from the territory's tangled history of abandonment and invasion are already stirring.
Some of the 600 people waiting for their pensions on Tuesday had other complaints.
"I cannot use my escudo to buy anything so I will take it to my priest, he would change it," said pensioner Cipriana da Silva. The escudo is one of four currencies in circulation in East Timor.
Most daily transactions are carried out in Indonesian rupiah, but big-ticket items are often priced in Australian or U.S. dollars.