Risks of disrupting government financial policies

With the exception of the year 2019, in which a formal budget was announced that did not adhere to the budget system in effect in the law of the Republic of Yemen, the legitimate government has spent its performance and activities since 2015 without a clear and transparent financial budget, which is a disastrous indicator of the extent of the imbalances, randomness and confusion that have accompanied government work throughout the past years.

It is no secret to anyone the extent of the risks resulting from disrupting the state’s public finances and working without a clear financial budget, as the absence of a budget necessarily disrupts financial policies, the absence of which leads to the spread of imbalances and the increase in indicators of economic failure. There is also no meaning or consideration for monetary policies that are concerned with achieving banking stability without activating the government’s financial policies and working according to a clear and transparent methodology and mechanism.

Governments go through a vicious cycle of confusion and chaos when they move away from adhering to a clear and specific methodology in managing their local economy, and are exposed to failure and failure, as is happening with us, as the government lacks many measures that achieve the conditions of economic stability and move towards achieving the general goals of the state in sustainable economic development.

Activating the state’s financial policies and preparing the annual budget appear to be urgent and necessary conditions for moving towards economic reform and achieving living stability, due to their positive repercussions on activating the effects of monetary policy in achieving exchange rate stability and preventing disturbances in public and basic goods.

The severity of the imbalances in the state’s administrative structures is exacerbated by the absence of methodology and sound vision in preparing the annual state budget, and commitment to financial spending according to the pre-determined classifications in the general budget. This means that working properly and eliminating randomness and failure requires further reform in the administrative aspect of financial institutions, and preparing a clear methodology for collecting and developing resources in a manner that is consistent with the size of expenditures and in a manner that achieves the state’s general economic goals of stability and growth.

It is no exaggeration to consider that one of the most prominent factors that contributed to this horrific deterioration in all aspects of living and services, and the exacerbation of the imbalances of the national economy, is the failure to prepare the financial budget, and the failure to activate the state’s public finances, since the government cannot conduct its business properly, without the existence of economic and financial plans, in addition to its direct impact on the monetary policy of the Central Bank, as it is difficult for the monetary authorities to activate their required tools in the exchange markets, with the absence of any figures in the state’s general budget, about the size of government revenues and expenditures.

(From the author's page)