SANA'A: Yemen government sources confirmed that the Cabinet had approved the 2012 budget, stressing that it will far deepen the country's current deficit, “but answer most Yemenis' demands in terms of social reforms and unemployment,” they told Bikyamasr.com. After a year of a protests, which often turned bloody, Yemen's economy has been left in tatters, reeling from the worst industrial and financial crisis in decades. Mohamed al-Hawri, the deputy minister at the Ministry of Planning and International Cooperation explained that the increase in governmental expenditure came in response to the security and political unrest, with an increase in budget of 38.9 percent compared to 2011 and a projected deficit of $2.7 Billion. “The general budget came in response to the needs of the transitional period, which explains the somewhat high deficit,” al-Hawri told Bikyamasr.com. The deputy further explained that the government intended to concentrate on key issues such as unemployment and poverty. “The draft budget includes provisions to provide jobs to 60,000 unemployed Yemenis, resolve half a million Social Security cases, and institute pay raises for state employees that had been delayed since 2005,” he said. However economists and financial analysts are warning against the risk of running such a deficit stressing that Yemen needs imperatively to generate more incomes by way if taxes or foreign investors if it want to be able to meet its short and long term commitments. Even al-Hawri admitted that if the 2012 budget was “promoting stability it fell short of stimulating economic growth and recovery.' Taha Al-Faseel, economics professor and advisor to Yemen's Ministry of Industry and Trade, said the budget is “ambitious”, saying that it responds to the people's aspirations. However, the budget's investment programme is “limited considering its vital importance to fighting poverty and unemployment,” he said. Investment is important in creating new jobs and stimulating the private sector, which has become a key economic engine in employing the workforce, he added. Al-Faseel said the surplus from the sale of oil and contributions generated by the Friends of Yemen conference — scheduled to be held in Riyadh next month — will be used to help bridge the deficit. “The government must also consider raising tax revenue, which only represents 6.5 percent of the GDP,” al-Faseel added, saying there are monumental tasks facing the government, including restoring health, education, electricity, and water services to pre-crisis levels, as well as repairing state institutions that were decimated by military clashes. BM ShortURL: http://goo.gl/TxMXN Tags: Budget, deficit, Economy, Yemen Section: Business, Latest News, Yemen
