Hitch your wagon to a star
An official document revealed hundreds of billions of riyals that have been withdrawn from Central Bank of Yemen as additional expenditures during the last three months (first quarter) this year.
The letter by Noman Al-Suhaibi, Minister of Finance confirmed that the amount of 135 billion riyals have been withdrawn on the overdraft from the Central Bank of Yemen.
The value of the government indebtedness of the Central Bank reached 609 billion riyals.
The excess in the actual budget implementation for January-March period reached 116.6 billion riyals;Oil derivatives support reached 159 billion riyals; government procurement of cooking gas during March-April reached 5.6 billion riyals.
The letter was addressed from Minister of Finance, Noman Al-Suhaibi to the Prime Minister, Ali Mujawar reveals the extent of tampering with the public money during the last period of time and the seriousness of the economical situation is because of these irresponsible practices. Al-Suhaibi assured in his letter that the shortage that is happening now cannot be dealt with or accepted; what is happening is a financial burden complicates the situation to its complexity.
- Withdrawal of 135 billion riyals overdraft from the Central Bank of Yemen.
- Total government debt of Central Bank of Yemen reached 609 billion riyals.
- Actual budget implementation for January-March period reached 116.6 billion riyals.
- Oil derivatives support reached 159 billion riyals.
- Government procurement of cooking gas during March- April reached 5.6 billion riyals.
Total: 866.2159 billion Yemeni riyals
Dr. Ali Mohammed Mujawar
Subject: Report on the most important indicators of public finance
Referring to the above subject and to your guides regarding the raising allowances of the state officials and the economical units
I am pleased to introduce to you this summarized report that shows the most important financial indicators up to date which highlights the seriousness of the continuity of the situation but exacerbated in case of any additional financial burdens as indicated by the following numerical indicators:
1. The net cash budget deficit planned for this year is 316 billion riyals and by 4% of the gross domestic product.
2. The additional burdens as a result of the decisions on the implementation of the third phase of the strategy of wages and salaries and the implementation of the new cases of social welfare and employment rate 25% of the graduates and the allowances for the period of 2005-2010 will be as followed:
A. The impact of implementing the third phase of wages and salaries (for the months of February, March and April).
- Carried out to date (February, March, April months) amount of 29.6 billion riyals.
- Expected until the end of the year, amount of 108.7 billion riyals.
B. Estimated annual cost of social welfare cases (500 cases) amount 22 billion riyals.
C. Estimated cost to accomodate 25% of the graduates + direction to 60 thousands degrees, 36 billion riyals.
D. The cost of the annual bonuses for the state employers and ecnomical units for the period of 2005-2010 amount of 79.5 billion riyals.
3. Through the effective implementation of positions for th period of January/March 2011, refelect the following:
A. Overdraft from Central Bank of Yemen to date reached 135 billion riyals.
B. Total government debt of Central Bank of Yemen to date reached 609 billion riyals.
C. Amount of 26 billion riyals was taken out of the treasury bills (withdrawn); this is the expense of new additives.
D. Amount of 18 billion riyals was settled in return to the benefits of a stage from last year, and this as well counts as an added expense.
E. The acutal balancing budget for January/March period reached 116.6 billion riyals; a net deficit of about 16 billion riyals.
4. Oil derivatives support until the end of March reached about 159 billion riyals.
5. Government procurement of cooking gas during March/April period reached 5.6 billion riyals.
6. On the resources side, the situation is as follows:
- The deficit in oil revenues as a result of the pipline bombing on March 14th 2011 around 2.5 million barrels, estimated 100 dollars per barrel. The deficit will be 250 million dollars equivalent of 53.5 billion riyals to date.
- The deficit in cooking gas revenues of 84 thousand tons, a rate of two thousands metric tons per day with an estimated value of 84 million dollars equivalent to 18 billion riyals.
- The deficit of fiscal resources, customs and the governments share in profits during January/March period reached 53.5 billion riyals.
From the above you can see that the deficit could reach 1,184,436 million riyals during the current year, at a rate of 14.1% from the gross domestic product as described in the attached table.
It is a deficit that can not be dealt with nor accepted.
Mr. Prime Minister,
The average monthly sales of the government from crude oil about 3 million barrels and on an average price of $100 per barrel in a cost of $300 millions which is 64 billion riyals. While the monthly average support of petroleum products reached 68 billion riyals, which means that the government needs to support all of the oil derivatives with the full amount of crude oil produced from the gas sector. In addition to four billions from the Central Bank of deficit. Whereas the income (non-oil) does not cover the salaries and wages in the current situation, how would it be in the case of bounces under these conditions?
In terms of our commitment to reduce the seriousness of the growing budget deficit to the extend that it can not be said to their sustainability, it is necessary to put you in the picture to be aware of the matter and we are confident of your desired care on the city to maintain the sustainability of public finances and not be allowed to add any new financial burdens that could add complications to its complexity.
Please accept my sincere regards,
Noman Tahir Al-Suhaibi
Minister of Finance