Budget 2001, there is still a chance! [Archives:2000/47/Law & Diplomacy]

November 20 2000

Dr. Saadaldeen Talib
Member of Parliamet
The government presented its budget for 2001 about ten days ago. The ministry of Finance read the budget statement that outlined some policies and figures and the members were then allowed to comment.
There was strong criticism about the budget and the same evening the parliamentary session was televised on prime time which was quite a unique event. Great public interest was created following that. So, what is wrong with the budget of the second year of the new millennium?
On first glance at the figures at which revenue grew by 25.4% (487 billion) and expenditure grew by 18.9% (501 billion) one may think the our economy achieved great successes and early growth was above 8%. But disappointment sets in when we learn what expected growth is only 3.9% for year 2000. This, coupled with population growth of 3.7% and inflation (8%) indicates that no improvement of living standards was achieved. In fact further deterioration is inevitable. The reasons for this could be illuminated only after a closer look.

Absent Policies
The budget is a prime government tool in applying to policies, particularly economic social, fiscal and administrative.
These policies should be set out clearly in the budget statement.
The difficulties facing these policies should be clearly stated, and government attempts to overcome them explained.
However, our budget only touches upon some indicators to highlight its claimed success. We know from other sources that it is $2.7 billion. The real source of this was budget surplus achieved by high oil prices from late 1999. through 2000 and the grows underestimation of these prices in last years budget.
This inevitably led to tight economic policies and under investment which resulted in slow economy and higher unemployment and, ironically, a huge surplus in 2000. Parts of this surplus was spent different fields with less regard to real investment leading to growth. In late October this year a supplementary budget was presented to parliament for the amount of 119 billion riyals, seeking approval.
Apparently, in 2001 budget the government is seeking to replay the scenario in order to achieve a huge surplus at the expense of public expenditure and growth. This is done by again underestimating the price of oil ($22/barrel) although market is quite stable above $30/barrel.
Policies on interest rate, foreign investment, administrative reform, and corruption control. Smuggling continues, year after year, to hinder growth of custom duty income No growth is shown on income tax except that relating to currency devaluation (4-5%). All these items are good indications of economic activity and growth. They remain low. Revenues are principally clung on the price of the barrel in which makes up about 70% of revenue (YR 329 billions).

Absent Wisdom
On looking at expenditure, one only needs to look at the attached table of yearly investment in important public services of education and health.
It is clear that such important expenditure is decreasing despite the great need of such services for the public of the Yemen. The need is especially enhanced by the dangerously high birth rate.

Will They Reconsider?
The budget is still in parliament to be studied by the budget committee which will present its report – and then get approval. This is supposed to be done by 22 November, 2000 after which parliament goes on holiday for the month of Ramadan. The committee has, in fact, spoken its concerns to the government. No clear answers or response was given.
However one comprehensive suggestion is still on the table. This is to request or, indeed, demand that the government allocates an additional 20 billion riyals for investment in education, health, roads etc. through local authorities all over the country – perhaps by allocation to constituencies (population representation) of equal funds. This should initiate these local development and general impowerment of services and general feeling of well-being and the feeling that there is a conscious government in the land. This amount is equivalent to only US$ 120 million and can be easily achieved if one reprices oil at $24/barrel instead of $22/barrel. The budget still stands to make a surplus. It is an excellent opportunity to try local development by local authorities.
We have only touched in some aspects of the budget. But they are of the most serious concern.
Government should be considerable of the peoples needs and parliament should make sure that it is.