As Gov’t Spends More than It Earns! T-Bill Debt Piles Up [Archives:1998/10/Front Page]

March 9 1998

The government has been borrowing by issuing treasury bills to finance budgetary deficits based on advice from the International Monetary Fund. That was the lesser of two evils to the government. Before that, the budget deficit was being financed by issuing fiat money, leading to inflationary pressures and loss in the value of the national currency.
But better advice would have been to urge the government to live within its own means. By spending more than it can earn, that state has been running up lots of debt.
The last issue of Treasury Bills (T-Bills) was the 37th in a row on February 9th, 1998. By that time, the government had piled YR. 62,235,660,000 in debt. About half of the money is owed to banks, while the balance is almost equally divided between corporations and companies on the one hand, and individual investors, on the other.
Most of the T-Bills used to be very short-term (91 days) in duration. But, the Central Bank of Yemen has gradually phased in the 182-day and 364-day bills.
Return on the bills started very high, as the government tried to attract investors. The early issues saw returns as high as 30%. Today, the rate of return has tapered to around 18%.
The volume per issue has also grown several fold – from a few million to around 2-4 billion per issue.