SANA’A, March 14 — Yemen’s cabinet last week approved the 2012 budget, the largest budget in Yemen’s history.

The budget revenues for 2012 are estimated at the central and local levels to be more than YR 2 trillion ($9 billion), an increase of 25 per cent  compared with last year’s revenues of YR 1.5 trillion ($7 billion).

The expenditures for 2012 are estimated at YR 2.5 trillion ($11 billion), meaning the government will need YR 560 billion (more than $2 billion) to cover the deficit.

The national unity government is expected to cover the deficit through seeking further financial assistance. It is expected that donor states will grant billions of dollars to the country to help Yemen out its degraded economic state.

“The large deficit from expenditures can be covered through the government’s reliance on funds from donors,” Professor of Economics at Sana’a University, Mohammad Jubran, said.

“The former government failed in dealing with donor funds,” Mutahr Al-Saeedi, a former minister of cabinet affairs, told the Yemen Times.

“The government institutions were fragile and unable to accommodate the  financial grants pledged to Yemen,” he said.

He warned the consensus government against covering the deficit through printing currency, as former governments have done, affirming that the situation will become disastrous if the current government applies such a process.

“That will reduce the value of the Yemeni currency,” he said.

Ali Al-Wafi, an economist, said that if the government does not obtain the required assistance, it will face a substantial deficit in the budget. It would then be unable to pay for many things, in particular investments, that depend to a large extent upon foreign assistance.

The 2012 public service budget included employment of 25 percent of the job applicants since 2010 to the Ministry of Civil Service and Insurance (about 50,000 applicants). This entails a financial cost of YR 25 billion ($116 million), as well as 11,000 positions already planned in each annual budget.

This year’s budget also included the cost of annual allowances from 2005 to 2010 for public servants, which is YR 65 billion ($303 million), and the annual allowances for 2011 of YR 21 billion ($98 million). Also included were the appropriation of adjustments according to seniority and qualification costing YR 19 billion ($88 million).

The budget further included 500,000 cases of social security costing YR 22 billion ($103 million), appropriated by the government last year.

The budget proposal will be set for debate and discussion in the parliament next week for endorsement.