With a YR 127 billion deficit loomingParliament approves 2006 State general budget [Archives:2006/908/Front Page]

January 2 2006

Yasser Mohammed Al-Mayyasi
SANA'A, Dec. 31 ) Parliament approved on Wednesday the State general budget for fiscal year 2006, supported by votes of 153 MPs affiliating with the General People's Congress (GPC), while opposition and independent MPs strongly objected to it.

Opposition and independent MPs opposed the 2006 budget due to government failure to eradicate corruption and its pursuit of failing economic policies negatively impacting the population.

According to opposition, government's current policies lack transparency, reliability and accuracy, particularly in data concerning oil-related revenues.

Opposition MPs released a statement accusing government of playing with public spending and recording large sums of money, included in 2006 budget items, amounting to 320 billion Yemeni Riyals that went to the unknown. The statement also blamed government for the spread of corruption, lack of human development and failure to improve citizens' living standards.

Opposition charged government with including unreal and misleading scores, without transparency, in the general budget, saying government never committed itself to implementing Parliament's recommendations upon approving the 2005 general budget.

Among those recommendations was that government should open a special account in the Central Bank of Yemen for increased oil-related revenues and such revenues be spent according to law and with a high degree of transparency. The 2006 budget, opposition leaders claim, suffers from a reduction in local authority revenues.

Despite increased revenues in past years, opposition MPs said government always insists there is an annual budget deficit and that the country's economic situation signals deterioration.

Government cannot suggest suitable solutions to the country's current economic situation nor any measures through which the national economy can revive. The economic situation has been cited by international organizations and donors who confirm that Yemen experiences rampant corruption and warn of unprecedented economic and social catastrophe.

Opposition justifies rejecting the 2006 budget because it has never shown any successful indicators of the current five-year plan. Government indicators and reports reveal huge differences between the budget plan and what actually is achieved.

A parliamentary committee previously was authorized to study the 2006 budget, and accordingly, reported numerous infringements to be rectified.

Among the infringements is that average expected development in fiscal year 2006 will not attain the goal of the five-year plan, nor comply with the targeted development average included in the national poverty alleviation strategy.

According to opposition, current development progress is far from the Yemen envisioned for 2025, indicating annual economic growth not less than nine percent and aiming to double average per capita income, pushing Yemen onto the list of countries of medium-sized human development.

The committee's remarks exposed that spending on some services like education and health is not encouraging, emphasizing that education expenditures decreased from 21.2 percent in the 2005 budget to 15.5 percent in the 2006 budget. Additionally, there is increasing deterioration of health services, as approved financial allocations will not bring improvement and health services expansion. Rural areas still suffer deterioration in this sector.

Health services outreach does not cover 50 percent of the overall population nor 25 percent of the rural population, according to opposition leaders, and the 2006 budget does not consider rising unemployment and its inherent risks. The actual situation never saw any change with regard to improving the investment environment and boosting activities of local and foreign investments.

Government confirms some remarks concerning the 2006 budget require conducting studies to lessen additional burdens on the budget.

Government holds the view that in light of Parliament's 2005 budget recommendations, it has taken measures to enhance control of financial aspects and that ruling party MPs approved this year's budget with a number of recommendations.

Ruling party MPs recommended that government approve future budget projects in light of economic and social development programs and plans whose goals are met by such projects.

They also demanded government focus more on activating important aspects supporting the national economy, such as strengthening fields of investment and foreign trade; upgrading markets and their different mechanisms; and fighting monopoly and encouraging competition, the main conditions for achieving a high and sustainable development rate. If fulfilled, these conditions will help create more job opportunities, improve citizens' living standards and eradicate poverty and infringements.

One of the recommendations accompanying budget approval is that future budgets account for unemployment and poverty indicators and procedures government can take in tackling these problems.

Total spending in the 2006 budget is 1.18 trillion Yemeni Riyals, while estimated revenue is 1.05 trillion Yemeni Riyals, predicting a budget deficit of more than 127 billion Yemeni Riyals.

Irrespective of supporters of and objectors to the 2006 budget, plenty of economic measures may lead to either success or failure.

To some extent, the budget deficit seems big and terrible, particularly as it exceeds that of 2005 and warns of more deterioration and failure for Yemen's ailing economy.