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and the training and capacity building of human resources in the area of PFM at the municipal level.
2.2.3: Service Delivery and Performance Budgeting
The VI Constitutional Government is committed to ensuring the Annual State Budget ensures that public service delivery is more efficient, effective and accountable. To
further this purpose, the PMU has ee eated u de the P i e Mi iste ’s Offi e
PMO, with the mandate to link planning and budgeting as well as monitor the results to feed into planning objectives, together with the MoF. The creation of the
program classification will further help to better link planning and budgeting, and allow for structured prioritisation and the efficient allocation of Government
resources.
All of the Ministries are crucial stakeholders in the reform, and the Planning and Monitoring Unit PMU is working together with the MoF to support line ministries
throughout the budget preparation process, including by helping every Government institution define their priority programs, and by carrying out quarterly monitoring
of program expenditures.
In the context of the service delivery and performance budgeting initiative, the 2016 budget presents a classification of certain expenditures by program as well as the
usual classification by appropriation category and institution. Each Ministry has identified its major programs and submitted a joint budget submission classified by
program and activity. All budget books therefore include a Program Budgeting component, which breaks down expenditures within each line ministry by program
and activity for 2016.
2.3 Economic Overview
2.3.1 The International Economy
2.3.1.1 International Growth Trends
Legacies from the financial and euro crises are still visible in many countries in the form of weak financial institutions and high levels of public and private debt, this will
continue to sh ape the glo al e o o ’s ediu -term outlook. The varied impact of
these legacies, the recent decline in global oil prices and increased exchange rate volatility make it difficult to categorize overall global economic growth trends in
2015.
In general, growth in the advanced economies will pick up due to improvements in global financial conditions, the E
u ozo e’s g adual recovery and lower fuel prices, while in emerging and developing economies growth will slow down driven by lower
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international commodity prices and the slowdown in the Chinese economy. On balance as seen in Table 2.3.1.1.1 global growth in 2015, projected at 3.3, is likely
to be marginally lower than in 2014. Despite a marginal slow down, the high demand for goods and services associated with high growth rates in emerging and developing
Asia represents an important export opportunity for Timor-Leste.
Table 2.3.1.1.1: Real Global and Regional Growth Rates
Country Actual
Forecast
2013 2014
2015 2016
World 3.4
3.4 3.3
3.8 Advanced Economies
1.4 1.8
2.1 2.4
Emerging and Developing Economies 5.0
4.6 4.2
4.7 Emerging and Developing Asia
7.0 6.8
6.6 6.4
China 7.7
7.4 6.8
6.3 Timor-Leste
2.8 6.0
4.1 5.1
Sources: WEO Update 2015 IMF, Ministry of Finance, 2015 Growth forecast
2.3.1.2 International Price Trends
Global inflation driven by falls in the price of oil and other commodities is expected to decrease from 3.5 in 2014 to 3.2 in 2015. The lower forecast inflation in the
advanced economies of 0.4 reflects the declines in international commodity prices and continued weak demand in Japan and the Eurozone. In contrast, inflation is
expected to increase marginally in the emerging and developing economies from 5.1 to 5.4 in 2015, although recent oil price and exchange rate volatility have
added considerable uncertainty to this estimate.
Table 2.3.1.2.1: Global and Regional Inflation Rates
Actual Forecast
2013 2014
2015 2016
World 3.9
3.5 3.2
3.3 Advanced Economies
1.4 1.4
0.4 1.4
Emerging and Developing Economies 5.9
5.1 5.4
4.8 Emerging and Developing Asia
4.8 3.5
3.0 3.1
Timor-Leste 9.8
0.7 1.4
1.8
Sources: WEO Database April 2015 IMF
International Oil Prices
Oil prices fell significantly in the second half of 2014; by January 2015 the price of a barrel of oil had fallen by 60.8
2
from its peak in June 2014 see Chart 2.3.1.2.2. This brought an end to a four-year period of price stability at around 105 per barrel.
2
Brent Spot Price, Energy Information Agency
