East Timor: IMF concerned with rise in inflation in East Timor due to state expenditure doubling

2 July 2008

Washington, USA, 2 July – The International Monetary Fund (IMF) Tuesday said it was concerned about the rise in inflation in East Timor, at a time when the government is preparing to double State Budget expenditure.

In order that the expenditure will not imply “inflationary pressure,” the Timorese authorities have to be “careful” in their budgetary planning and control and look to improve, “administrative capacity” the IMF said, in a report published in Washington.

In December 2007, Parliament approved the 2008 Budget to the value of US$347.5 million, but the Reviewed Budget presents expenditure of US$773.3 million, the Timorese prime minister, Xanana Gusmão said in a document sent to Parliament.

Of the US$773.3 million, US$686.8 million are funded by a transfer from the country’s Oil Fund.

The figures compiled by the IMF showed that inflation has been rising continuously since 2005.

This “steep rise” is mainly due to a rise in food prices on the international market, which account for over half of the “basket of goods” used to calculate the consumer price index, and not counting these, “inflation is relatively low,” the IMF said.

For this year, inflation is projected to be 9.0 percent, or 1.4 percentage points higher than that for 2007, and 2.3 percentage points higher than in 2006. (macauhub)