We liberated the country... ...now we liberate the people of East Timor

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CNRT Advocates Modern Economic Policy In Line with Leading World Economies

Dili – 28th June 2007

In the lead up to the legislative election of East Timor, The Fretilin party led by Disgraced ex Prime Minister Mari Alkatiri continues to promote outdated social and economic policy, that has seen East Timor’s economy stagnate and recess over the last 5 years, and left citizens impoverished because of inept governance and maladministration. Fetilin’s ‘debt free’ policy is an outdated ideology that ignores the present social and economic needs of a country in crisis.

Over the past 5 years Fretilin has implemented a regressive and restrictive set of economic policies that has resulted in zero growth, negligible provision of vital infrastructure, mass poverty and starvation, and overall created a hostile environment for business. The key platform of this policy resulted in low levels of Government expenditure in key areas that East Timor so desperately needs to stimulate growth. Instead, precious funds were committed to unnecessary expenditure such as lavish life long pensions for parliament members rather than fiscal stimulus direct to communities. According to Fretilin’s election manifesto its political mandates look to continue unchecked, they have learned nothing.

It is no wonder that Mari Alkatiri, who has spearheaded the systematic downfall of the radical Fretilin regime, is often referred to as the leader of the ‘Mobuto clan’, an inner Fretilin core of former exiles from Mozambique. This group continues to promote a contradictory and autocratic fiscal policy under the Fretilin dominated parliament. In some cases, Ministers of the Fretilin government barely managed to spend 5% of their budget allocations due to an immobilized and centralized procurement system.

The Fretilin government’s continual refusal to adopt sound best-practice economic principles to promote growth is reminiscent of outdated Marxist principles, and can be compared in style to totalitarian leaders such as Antonia de Oliveira Salazar of Portugal and Nicolae Ceausescu of Romania, whose similar economic policies caused rapid social destruction and resulted in abysmal and undemocratic conditions for their citizens.

CNRT will follow proven economic principles and strategy that will involve appropriate stimulation of all aspects of the economy for rapid, controlled growth. People need jobs, and businesses need incentives to create jobs. To be confident, expanding businesses need to trust that the Government will provide stability, reliable infrastructure, a progressive tax system and sound economic management. CRNT is committed to providing these building blocks, employing Keynesian principles, which are well known to all free and fair socio-democracies and successfully implemented by global economies.

The Keynesian theory of economic principle encourages ‘expansionary fiscal policies’, which generate the ‘multiplier effect’ that can stimulate the economy by injecting key investment into infrastructure, education, basic research, and public health. This can quickly improve a country GDP, and yes, at times, this requires borrowing or deficit spending.

Once a market increases in size due to initial investment, or a substantial induction of funds, the economy is further stimulated through rising business profitability, a rise in private investment, and an increase in employment. The ‘accelerator effect’ can promise rapid growth versus stagnate results.
When the Fretilin government restricted output with harsh centralisation and refusal to borrow or allow deficit, the economy became immobilised resulting in high unemployment and a decrease in GDP. This is a proven record of Fretilin failure hidden behind a ‘debt free’ badge of honour.
If a government borrows responsibly to increase the public and private sector, or to make sound investments for the future specifically against a healthy capital, the vast majority of economists would agree that this is both necessary and beneficial. It is noted that running a government surplus may reduce consumer and business spending and raise unemployment. It is simple, proven and best practice economics, Governments are charged with the responsibility to seek all exhaustive options to ensure social and economic prosperity.
CNRT adopts proven economic policy. The CNRT does not accept that ‘debt free’ is necessarily appropriate for an economy as young and as poorly developed as East Timor’s. CNRT favours the use of automatic stabilisation over ‘active or discretionary’ use of deficit to fight poverty, and supports diversifying the current petroleum fund, which at present is 100%, invested in US treasury bonds. Diversifying the national portfolio, to include a lending facility within the county with a medium return, between 7-8 per cent, will encourage a higher return on investment and represents vital investment back into the country.

Adopting borrowing strategy from lending facilities such as the Kuwait fund, which incurs a 1% interest rate, is prudent, fiscally manageable and could provide the fiscal stimulus to reactivate the immobilised economy of East Timor.

The end result in a vote for CNRT is a vote for prudent, fiscally responsible, modern and progressive care taking.

“Fretilin flaunts the fact East Timor is debt free, but debt free equates to total inaction,” stated Babo Soares. “Are they proud that a tenth of our population is displaced? Sure - but we are ‘debt free’.  Are they proud that our children are dying from malnutrition and other easily curable diseases?  Sure - we are ‘debt free’. Are they proud that fifty percent of our population has no access to drinking water? Sure - we are ‘debt free’. Are they proud that the non-Oil revenue GDP is actually decreasing? Sure - we are debt free! It is such a simplistic and arrogant approach to economics, but worse than that, it is based on principles that sustain poverty.

“I wonder where our blessed country would be if half a decade ago Fretilin had firstly established an appropriate, decentralised procurement structure so that our citizens could have received adequate services? I wonder where our country would have been had Alkatiri and his inner core had not caused one of the worst outbreaks of violence since independence through inept and arrogant governance in 2006? I wonder where we would be had the Fretilin government considered prudent borrowing strategies to invest in the country, and in the public and private sector so that a half a decade later we could have seen some measure of improvement?

“This is a simple equation, we have seen the devastating effects of the Fretilin governance, now we can proudly enter a new era of surety and law and order. CNRT led by the His Excellency, president Xanana Gusmao, will establish a free and fair democracy, progressive in thinking, modern in approach and committed to adopting best practice contemporary economic principles. CNRT is committed to honouring the constitution, which our people fought so hard to attain. The time for change is now, it began with the election of our new President, His Excellency José Ramos-Horta, and god willing will continue in the name of transparency and accountability with a new government led by CNRT.”

ENDS.

A detailed list of National debt by country can be found on the news section of www.cnrt-timor.org.

For Further Information contact:
CNRT Media Contact
T: +670 735 8696
E: cnrt.media@gmail.com
W: www.cnrt-timor.org

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