Inflation threatens Yemen’s economy

September 26, 2019

The Sana’a Center for Strategic Studies revealed a huge inflation in the public salaries sector in Yemen after the the Houthi militias added thousands of names to the payroll of the military and security services.

The Sana’a Center report said that the inflation as a cumulative result of mismanagement of employment policies and administrative corruption because the payroll included a large number of fake names and double employment, and military and security leaders received financial and in-kind privileges.

Yemen faces a large budget deficit, estimated at 660 billion Yemeni rials in 2018, equivalent to $ 1.24 billion.

According to the report, public sector salaries represent 39.33% of expenditures provided in the first section of the government budget for 2019, and does not include government expenditures on other bodies and funds that are outside the first chapter.

Spending for the public wage sector rose from 977 million riyals in the 2014 budget to 1.2 billion riyals in the 2019 budget, although the houthis paid only about half of its employees.

About half a million employees in Sana’a and the rest of the Houthi-controlled provinces remain without salaries for nearly two and a half years, while the government pays the salaries of state employees in their areas on a monthly basis, including half a million military personnel.

This month, the International Monetary Fund (IMF) urged the Yemeni government to pursue better economic policies, improve revenue collection and intensify efforts to control and rationalize spending, particularly spending on the public sector wage bill.

According to the Sana’a Center report, the continuation of this situation threatens to undermine any expected economic recovery or future stability in Yemen.

The Sana’a Center for Strategic Studies report made recommendations to reduce the public sector salary bill, relating to the Government undertaking an assessment to estimate the increase in salary records.

The report stressed the need to reduce administrative corruption through the electronic fingerprint system to identify all employees.

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