Yemen announces first budget since 2014

By Nabil Abdullah al-Tamimi in Aden

Yemen's Prime Minister Ahmed Obaid bin Dagher looks on at the opening of a high-level conference to raise funds for Yemen on April 25th, 2017 at the UN Office in Geneva. [Fabrice Coffrini/AFP]

Yemen's Prime Minister Ahmed Obaid bin Dagher looks on at the opening of a high-level conference to raise funds for Yemen on April 25th, 2017 at the UN Office in Geneva. [Fabrice Coffrini/AFP]

Yemen's legitimate government on Sunday (January 21st) approved the country's first budget since the Houthis (Ansarallah) overran Sanaa in 2014.

Prime Minister Ahmad Obaid bin Dagher announced the 2018 budget at a government meeting held in the provisional capital of Aden.

He said spending in the budget is projected at 1.5 trillion Yemeni riyals ($3.9 billion), with revenues estimated at 978 billion riyals ($2.6 billion), AFP reported.

The Aden-based government projected a deficit of $1.3 billion, based on the official exchange rate of 380 riyals to the dollar -- higher than the market rate of about 450 riyals to the dollar.

In a post on Facebook, the prime minister painted a devastating picture of the country's economy, saying that oil and gas production -- the main source of revenue before the war -- had ground to a halt.

He said that $5 billion in foreign reserves and stocks of the local currency had been "looted" by Houthis who maintain a separate central bank in Sanaa.

Bin Dagher did not offer details on revenue sources for the budget but it comes on the heels of a massive bailout by Saudi Arabia, the main backer of the internationally recognised government.

The prime minister vowed "optimal use" of Saudi Arabia's $2 billion deposit to the central bank, which has buoyed the local currency in recent days, and said the new "austerity budget" would nonetheless guarantee wages for civil servants and the military.

Budget aims to 'normalise life'

The budget included providing the necessary services to citizens to "normalise life in liberated provinces", bin Dagher said in a speech at the meeting.

This will be achieved through the allocation of operational budgets to service sectors in liberated provinces, rehabilitating state institutions, and disbursing salaries to public sector employees in the civil and military sectors.

"The government will also work on ousting the coup stagers [Houthis] in the areas they have been controlling since September 21st, 2014," said bin Dagher.

The coup has affected the country on "all economic, social, political and humanitarian levels", he said, adding that it has compounded the phenomena of poverty, disease and illiteracy.

"The Houthi [-instigated] war has largely destroyed the country's infrastructure, sabotaged the economy, undermined state institutions and some private sector enterprises," he said.

Bin Dagher accused the Houthis of "looting all that they have laid their hands on, stopping the production of oil and gas -- the main source of the country's budget over the last three decades -- and eroding the state's financial sovereign sources".

The government decided to bind all state institutions in all provinces to transfer the central state revenues to the government's account with the Yemeni Central Bank in Aden, local media reported.

The salaries of public sector employees in the provinces under the Houthis' control will be paid when revenues in their areas are transferred to the Central Bank in Aden, bin Dagher said.

Budget a 'positive step'

Meanwhile, economic experts urged the government to try to expand the base of government revenues and alleviate the sufferings of public sector employees in all provinces.

"The government must work on alleviating citizens' sufferings, especially public sector employees in all provinces, rather than restrict the payment of salaries to liberated provinces," economic expert Abdul Jalil Hassan told Al-Mashareq.

"By attempting to revive oil and gas exports, the government can increase revenues," he said.

Oil and gas exports represented 90% of the country's exports, 70% of revenues, and 30% of the GDP before the war, he added.

Hassan reminded the government of its commitment when it decided to move the Central Bank to Aden on September 18th, 2016.

"The Central Bank Governor had promised to pay the salaries of public sector employees in all provinces," he said.

The announcement of the budget is a positive step for evaluating the government's performance, Studies and Economic Media Centre president Mustafa Nasr told Al-Mashareq.

"The budget included paying the salaries of civil employees in the health and judiciary sectors, as well as university and High Electoral Commission employees, in areas controlled by the Houthis," Nasr said.

However, it did not include the salaries of other public sector employees in Houthi-controlled areas, especially teachers, he added.

"The suffering of public sector employees in those areas will continue until the state can retake those provinces," he said.

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