WB to recommend smaller govt budget for E. Timor

WB to recommend smaller govt budget for E. Timor

DILI (AP): The World Bank said Tuesday that it will recommend a smaller government budget for East Timor than what the region received when it was part of Indonesia.

Indonesia spent about US$110 million annually in East Timor, mainly to maintain a large civil service.

World Bank spokeswoman Sarah Cliffe said those expenses would have to be streamlined.

"The budget of the administration under Indonesia was both very high per capita and involved a high number of civil servants per capita," she said at a news briefing.

The bank's recommendations for administration of the territory will focus on a reduced civil service with a smaller budget, which will be more sustainable for East Timor in the long term, said Cliffe.

A World Bank team has been in East Timor for the past 10 days to survey development needs for the territory, which voted in August for independence from Indonesia.

Anti-independence forces rampaged in the wake of the vote, destroying property and displacing most of the population. An international peacekeeping force intervened in September to restore order.

Indonesia handed over control of East Timor to the United Nations last month. A U.N. transitional authority will run the territory for several years until it is ready for self- government.

Cliffe said the bank's research team is currently working on a budget proposal. The funds will be controlled by the United Nations Transitional Authority in East Timor, UNTAET.

How the money is spent won't be determined until a final report is presented to an aid donor's meeting in late December.

"There will have to be substantial discussions with UNTAET and more discussions within Timorese society before that's finalized for next year," Cliffe said.

The World Bank is proposing that agriculture be the first sector to be developed, with the multimillion-dollar coffee industry leading the way to recovery. But the bank warns that productivity will have to be higher than in recent decades to achieve a sustainable industry.

"We have an opportunity here to restore the agricultural cycle back to its normal situation if it's acted upon quickly, said Cliffe. "If the programs for the distribution for seeds and tools do not get underway quickly, then you would be in a situation of aid dependency for a longer period."

Accounts

The International Monetary Fund said in Darwin on Tuesday that Indonesian banks which operated in East Timor before the territory's infrastructure was destroyed by militia violence will honor East Timorese accounts.

The Fund, which is preparing a report on how to establish a macroeconomic framework in the shattered territory, said three Indonesian banks had already reported making some transactions on East Timorese accounts in Kupang in West Timor and in Jakarta.

"Essentially what they have told us is that they have been and continue to be ready to authorize withdrawal of deposits by East Timorese residents, provided they can prove ownership," said IMF Asia and Pacific representative Luis Valdivieso.

"Of course, they are ready to do this but the quid pro quo is that they would like to be able to go after the borrowers who are not servicing their loans," he told Reuters.

Valdivieso, who has held talks with government, U.N. and aid officials in East Timor and Indonesia over the past two weeks, said Indonesia's central bank was aware of the transactions.

He said the East Timor branch of Bank Indonesia had been shifted to Kupang and most of its records still existed.