Dili's interim government has approved a USD 75 million budget for East Timor's first year as an independent state.

The budget, approved Monday, centers on increased taxes, tightened public spending, subsidies to local administrations and the creation of a special fund to lessen the impact of the end of the United Nations transition administration, according to a cabinet statement released Tuesday.

The territory gains its independence May 20.

The biggest slice of the budget pie goes to education, health and public works, and includes a request for a USD 10 million supplement which will be presented to international donors during a May 14-15 meeting in Dili.

The cabinet also decided to create a so-called Petroleum Resources Investment Fund, with the aid of the International Monetary Fund, to define strategies for saving and applying future revenues from oil- and natural gas-operations in the Timor Gap.

Estimates indicate Dili will garner more than USD 300 million yearly, beginning about 2004, from the offshore fields.

The 800,000-population territory's villages, towns and infrastructures suffered immense destruction in violence unleashed by vengeful Indonesian forces at the time of the 1999 independence plebiscite.