Another Milestone: The 1998 Budget [Archives:1997/50/Front Page]

The Government presented its 1998 budget to parliament for discussion and approval. The numbers present yet another hopeful sign. Total revenues for 1998 are put at YR 336.6 billion, an 11.7% increase over 1997; while total expenditures are put at YR 350.1, a 3.8% rise over 1997. The deficit is thus envisaged at 3.15% of GDP, which the government pledges to finance from “non-inflationary” sources. One of the main features of the 1998 budget is that it envisages a major reduction in the allocations for military uses.
Parliament is busy these days deliberating on the 1998 budget submitted to it by the government on Saturday, 13th December, 1997. Mr. Mohammed Abdo Saeed, Chairman of the Economic and Financial Committee, told the Yemen Times that his committee will present its views to the full parliament before the end of this month.
THE BUDGET NUMBERS: in million current Yemeni Riyals MAIN SOURCES OF   REVENUE 1998 1997 1996 1995 1994 Oil/Gas 205,188 190,505 136,234 28,658 11,247 Taxes 44,251 33,652 31,030 21,351 12,649 Customs Duties 29,653 29,022 25,997 16,738 7,328 Return on Investments 17,292 16,184 11,552 15,771 6,679 Foreign Aid 26,953 19,555 16,169 3,663 1,471 TOTAL 336,583 301,222 232,225 93,314 42,857 MAIN ITMES OF EXPENDITURE: Defence 53,842 53,963 44,964 35,896 30,273 Education 61,343 52,837 36,993 22,709 16,693 Health 13,438 10,508 8,860 4,372 3,028 Security 22,417 18,752 14,997 11,332 2,809 New Investments 56,578 41,325 20,677 7,922 7,755 Food/Energy Subsidies 50,056 74,023 40,642 — — Constribution to Sectors 12,691 12,345 18,121 4,744 1,153 Debt Servicing 33,400 31,410 24,133 16,986 11,231 TOTAL 350,054 326,595 232,755 119,880 87,128 DEFICIT Current Account Defict +31,028 +2,690 59,008 25,237 39,589 Total Deficit 13,471 25,373 530 26,566 44,271

The numbers of the budget are quite encouraging, as can be seen from the five-year comparison (please refer to adjacent table). The Minister of Finance, Mr. Alawi Salami, who presented the budget, had a lot of good news to report. “Since our country embarked on the reform program, much has already been achieved. Let me enumerate a few just as a reminder: – unification and stabilization of the exchange rate. (Yemen today has one market-based exchange rate. The US$ dollar fetches around YR 132 in the open market); – building of international reserves. The net foreign position of the Central Bank of Yemen is more than US$ 1 boillion today; – reduction in the budget deficit as a percent of the GDP; – financing the budget deficit by non-inflationary means; – reduction in the level of inflation. (The core inflation rate was 71.3% in 1994, 62.5% in 1995, 27.3% in 1996, and 7.3% in 1997); – correction of the interest rates, and reduction in local liquidity. (The banking interest rates fell from 23% at the end of 1996, to 14% in May, 1997, to 11% in December 1997); – launch of the structural reforms of the tax and customs systems; – trade liberalization and correcting balance of payments imbalances.” Indeed the parliamentarians applauded the minister as he listed the achievements. “But there is more work to be done, and the 1998 budget is part of an on-going effort to bring equilibrium to the economy and to enable the private sector take on an increasing role,” the minister added. Towards that end, the 1998 budget calls for continued support for the public sector corporations which prove their ‘viability’, and liquidation and/or privatization of those which are unable to perform well. Beyond the numbers and declared objectives, the main achievemtn of the 1998 budget must be its decentralized disensation. According to Regulation (1) of 1997 (which gives the governors and directors of the bureaus of the ministries the right to financial authority and dispensation), and Regulation (213) of 1997 regarding the bill of Local Administration, the 1998 allocations will immediately be transferred to the governorates. Sanaa will retain only the allocation pertaining to the head offices. The government also hopes to achieve a an ambitious 7.2% growth rate in 1998. Observers believe that the government will attain at least a 5% growth rate.
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