Government approves 2009 budget [Archives:2008/1205/Local News]

November 6 2008

By: Saddam Al-Ashmori
SANA'A, Nov. 5 – With a total of 1.5 trillion Yemeni Riyals the Yemeni government approved the budget for the fiscal year 2009 in an exceptional meeting yesterday. The public expenditure was estimated at YR 1.9 trillion, yielding a 7 percent of Domestic Gross Product as a net deficit of the budget.

The government had apologized earlier to the parliament for delaying the presentation of the public budget for the upcoming year, which is typically due two months before the end of 2008. Demanding a chance to review the financial plan, the government attributed the setback to the importance of reconsidering budget projects due to the global financial crisis.

Parliament members Sakhr Al-Wajih and Nabil Basha stressed the importance of determining a deadline to present the budget, as parliament members would be on a long vacation beginning from December to the end of January. Al-Wajih added that the government's demand is logical, as the budget was drawn up on the basis of the old high prices of oil and should be reviewed again as oil prices have decreased notably during the past few weeks. In a related matter, the parliament discussed the financial committee's report on the global financial crisis and its consequences on the Yemeni economy, summarizing the effects of the crisis and decrease of oil prices on the country's revenues, payments and trade scales which witnessed a surplus this year due to high oil prices that exceeded USD 146 a barrel. The committee also expected that foreign support and loans will be reduced.

The committee's report said that the Yemeni monetary reserve is safe as it was deposited in various world banks. In addition, it said that the monetary reserve deposited in the U.S. is safe from the financial crisis as it was invested through the Federal Reserve Bank, and pointed out that the amount of money in the U.S. represents only 1.7 percent of the total monetary reserve of the country.

European countries in which the Yemeni monetary reserve is invested have assured the Yemeni government that their deposits are safe in the banks. Up to 69 percent of the Yemeni reserve is in U.S. dollars, 20 percent in Euros and 9 percent in British pounds and the rest in other currencies, according to the report.

The report further stressed that Yemeni banks have not been affected by the global financial crisis due to the availability of liquidity (70 percent in trade banks and 50 percent in the Islamic banks). In addition, local banks are not linked with the real estate investment banks which caused the global financial crisis. The committee emphasized the importance of developing both local and foreign investment opportunities and taking all measures to prevent smuggling of the oil derivatives as well as broaden oil investments. It confirmed that the Ministry of Finance and the Central Bank do not allow public institutions, corporations and the private sector to invest in treasury bonds.

It stressed the importance of obligating local banks to abide by credit and loans criteria. The committee further called on parliament members to pursue the discussion of the Property Register project that the parliament turned back to the committee last Monday to conduct further studies on it based on demands of more than 20 parliament members.

Meanwhile, MP Sakhr Al-Wajih said that the reason for returning the project to the committee was because it stipulated that the Property Register was part of the Public Property and Land Authority, demanding that the register be a specialized, independent authority or part of the Ministry of Justice.