Government presents proposed budget for parliamentary approval [Archives:2006/1004/Front Page]

Mohammed Bin Sallam
SANA'A, Dec. 3 – The government presented its 2007 general budget proposal to Parliament for approval earlier this week. The proposed budget totals YR 1.375 trillion, thus exceeding 2006 budget estimates by 40.72 percent or YR 397 billion.

The 2007 financial statement attributes such an enormous budget to the positive effect related to an expected increase in oil prices, as well as increasing tax revenues and improved national economic performance during 2007.

Minister of Finance Saif Al-Asali read the financial statement at this past Saturday's parliamentary session, chaired by Speaker of Parliament Sheikh Abdullah Bin Hussein Al-Ahmar, in the presence of Prime Minister Abdulqader Bajammal and other cabinet ministers. The statement estimated a YR 300 million increase in foreign funding and in-kind grants from YR 19.6 billion for 2006 to YR 19.9 billion for 2007.

Estimated 2007 budget revenues are YR 1.434 trillion, compared to YR 1.42 trillion in 2006 – a YR 392 billion increase or 37.62 percent.

Total public spending for 2007 is estimated at YR 1.62 trillion, compared to YR 1.17 trillion in 2006, which is a 39 percent increase.

The operating budget for wages, salaries, commodities, services, transfers and grants is re-estimated at YR 1.22 trillion, which includes YR 329 billion in oil product subsidies. If that portion is excepted, compared to what's referred to in the General Budget Law, the operating budget will decrease by that amount, YR 329 billion. The high operating budget is attributed to increased payments owed to retired employees of military and civil institutions.

Al-Asali clarified to Parliament that capital expenditures are re-estimated at YR 301.3 billion. The road sector tops the list of expenditures, receiving approximately YR 50 billion in domestic funding and YR 13.1 billion in foreign funding.

As a result of a government commitment made before Parliament, the state exerted sincere efforts to control public spending, whether in the operating budget or capital expenditures, Al-Asali explained. However, the budget deficit is expected to amount to YR 188.3 billion, equivalent to 4.73 percent of gross domestic product. The targeted budget deficit is only YR 172.3 billion, equivalent to 3.9 percent of estimated 2006 GDP.

If the budget deficit is counted before aides, which reflects the ability to cover state spending, more effort to rely on available domestic financial resources becomes a must.

Al-Asali pointed out that the budget deficit is expected to total YR 224.3 billion, equivalent to 5.63 percent of expected 2007 GDP. He expects foreign funding to contribute YR 40 billion, which is equivalent to 9 percent of expected 2007 GDP.

In presenting its proposed budget, the government said it will provide all requirements necessary to support the armed forces and security apparatuses. In this regard, lunch, uniform and maintenance allocations owed to military and security forces were raised.

Regarding the third five-year plan jointly approved by Parliament and the Shoura Council, the government specified 2006-2010 priorities of reducing dependence on oil as its main income source and introducing new sources. The general budget proposal considers this point by reducing repeat expenditures and using available resources to fund investment in promising sectors. The proposed budget also covers public institutions' assistance in improving public services.

Concluding its statement, the government said it expects more fruitful cooperation between legislative and executive authorities, further indicating that Parliament studied the project in order to achieve economic goals to enhance monetary and financial stability and improve citizens' living standards.

Many MPs commented on the financial statement's content, which caused Prime Minister Bajammal to clarify several inquiries by MPs, pointing out that the 2007 general budget comes as an implementation of parliamentary recommendations.

Parliament approved referring the financial statement and the state's general budget for fiscal year 2007 to a special committee presided over by Deputy Speaker of Parliament Ja'afar Sa'eed Basaleh, finance committee members, heads of permanent committees and heads of parliamentary blocs.

The state also named its representatives to discuss 2007 general budget projects with Parliament's special committee. Government representatives include the ministers of finance, local administration, planning and international cooperation, civil service and security, oil and minerals, the state for Parliament and Shoura Council affairs, the governor of the Central Bank of Yemen and the deputy ministers of finance, and planning and international cooperation.

Islah's Bafadhl comments on the proposed 2007 budget

Abdurrahman Bafadhl, head of Islah Party's parliamentary bloc, asserted that the government has changed nothing but the date with regard to the budget. Facing increasing revenues, the government increases its spending and never rationalizes expenditures.

“Every year, the government mentions a small budget deficit nearing 5 percent, but by the end of the year, it demands additional allocations equivalent to 40 to 50 percent of the total budget. Every year, the government breaks the constitution and financial law and spends large sums of money without Parliament's approval,” the MP reacted.

“Like last year, the government took $2 billion, which is equivalent to YR 420 billion. It says it sells oil for $30 per barrel, whereas it's priced internationally at $50-70. It spares nothing of the oil revenues,” he explained.

“The government said it exported 39 million barrels of oil in 2006; however, it exported 60 million barrels in 2005. How can the quantity be reduced by 50 percent?” Bafadhl wondered.

“Government doesn't tackle any issues related to water and electricity, price hikes, unemployment or poverty. It doesn't work to fight corruption or improve citizens' living standards, nor does it hear what MPs say,” he added.

Bafadhl hopes the Yemeni government will use additional allocations to tackle such issues because he says the majority of citizens receive nothing of their rights. He also hopes it will grant local councils more administrative and financial authority to help address various social and economic issues.

“The government lies via official media, particularly as it still exercises a system of centralization. If the government quit the centralization system and gave each governorate its projects to implement, it would be a great move toward development,” he concluded.
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