Government Demands Additional Funds for Budget [Archives:2001/49/Business & Economy]

December 3 2001

The PGC-led government failed to anticipate the amount of public expenditure for the year 2001, as it submitted a memo to the Parliament concerning the opening of an additional credit for the public budget totaling YR 75,351,393,000, so as to finance credits from public revenues without specifying the way to retain the same level of deficit totaling YR 14,039,000 this year. The Parliament referred the request to the Financial Committee for them to study the proposal and to report to the Parliament for approval as expected, especially since a similar request submitted by the government was approved last year demanding YR 18 billion. Economists say the government’s request has surpassed the amount of spending specified in the budget totaling YR 501, 882, 449,000, which means there was a misjudgment of the total amount of spending. Furthermore, the request for new credit indicates the existence of a deficit, most likely being affected by the estimation of the amount of public revenues. The estimated budget included total revenues at YR 487,843,000, an increase of 25.4% from the year 2000.
A Parliament source said that the government attached its request with many justifications for the measure, but the reasons are not persuasive. The reasons for the additional funds included to account for the wage increase of civil servants and military personnel, which equalled 15% and 25% respectively, as well to make up for the delay in implementing new pricing reform measures. The governments request failed to mention the amount of government revenue saved from the lifting of subsidies of oil derivatives, as one liter of diesel has risen from YR 10 to YR 17. The general budget is expected to cover the deficit through non-oil sources. Currently, oil and mineral sales total YR 329.4 million, equalling 67.5% of the total general budget.
The government’s request disclosed the existence of irregularities in spending, substantially exceeding the budget deficit of the year 2001. Some of the irregularities exposed by the report included allocating YR 801 billion for projects belonging to the Ministry of Public Works; the earmarking of revenues from plots of land located near the Presidency Office in Sana’a totalling YR 4.206 billion for some projects of the General Authority of Rural Electricity and Water; and the non-payment of the debts owed to the Ministry of Electricity. Economists confirmed that during the last months of this year, he government has failed to develop self-revenues (i.e. non-oil revenues), as it had promised in its last budget plan. Ultimately, the government needs to review its estimations for the general budget and the volume of its revenues. Similarly, it should work out a scientific plan to improve general economic performance and to aid in economic recovery in order to improve the standard of living of its citizens.