Price hikes, plus an expected drop in oil productionYemen’s 2005 draft budget irks opposition [Archives:2004/798/Business & Economy]

December 13 2004

Mahyoub Al-Kamaly
Price hikes as part of broader economic reform still hang over Yemen's economic picture for 2005. That glimpse into the state budget has aroused political differences and negative reactions from the opposition.
The reform aims at liftin the subsidiary used to support prices of oil products.
The draft budget estimates revenues at YR 761.8 billion, and spending at YR 836.4 billion, resulting in a 2005 deficit of YR 74.56 billion.
Opposition newspapers say the deficit is an indication of the failure of the government's economic policy, noting in particular that military spending is up at the expense of development and services projects.
Opposition sources have also criticized the appropriation of YR 144 as subsidies to oil products, against YR 136 billion for the year 2004.
The opposition says the government intends to implement a new price hike that would affect people's life and herald of more social disasters, and raise in proposition of poverty, whereas the new year would be a year of more suffering for the ordinary people.
The 2005 draft budget draft has focused on:
– Increasing spending of local authority to an amount of YR 163 billion, compared to YR 137 billion in 2004,
– Developing and modernizing the educational system at a cost of YR 177 billion against YR 162 billion in 2004,
– Giving an addition YR 42 billion to the health sector, against YR 35 billion for 2004.
– Giving YR 196 billion for capitalist and investment expenditures and YR 37 billion as a contribution to capital of economic units.
The financial statement expects that Yemen's oil production will drop from 154 million barrels in 2004 to 144 million barrels in 2005.
It's believed the oil sector will see negative development while development rate in other sectors may reach at 4.1 per cent growth.