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Abu Dhabi, UAEFriday 22 June 2018

Yemen government announces first budget since war began

2018 budget released as UN issues appeal for nearly $3bn in humanitarian relief

Yemen's prime minister Ahmed bin Dagher attends a conference to raise funds for Yemen on April 25, 2017 at the United Nations office in Geneva. Fabrice Coffrini / AFP
Yemen's prime minister Ahmed bin Dagher attends a conference to raise funds for Yemen on April 25, 2017 at the United Nations office in Geneva. Fabrice Coffrini / AFP

Yemen's cash-strapped government on Sunday released its first official budget since Houthi rebels overran the capital Sanaa in 2014.

Prime minister Ahmed bin Dagher said spending in the 2018 budget was projected at 1.5 trillion Yemeni rials (Dh14.3bn), with revenues estimated at 978bn rials.

The Aden-based government projected a deficit of US$1.3bn, based on the official exchange rate of 380 rials to the dollar, which is higher than the market rate of about 450 rials to the dollar.

The budget was released on the same day the United Nations appealed for nearly $3bn in aid for Yemen, where the civil war, looming famine and cholera have killed thousands and put millions of lives at risk.

In a post on Facebook, the prime minister painted a devastating picture of the country's economy, saying that oil and gas production - the main source of revenue before the war - had ground to a halt and that $5bn in foreign reserves and stocks of the local currency had been "looted" by rebels who maintain a separate central bank in Sanaa.

Mr Bin Dagher did not offer details on revenue sources for the budget but it comes on the heels of a massive bailout by Saudi Arabia, the main backer of the internationally recognised government.

The prime minister vowed "optimal use" of Saudi Arabia's $2bn deposit to the central bank, which has buoyed the local currency in recent days, and said the new "austerity budget" would nonetheless guarantee wages for civil servants and the military.

Read more: Saudi cash injection boosts Yemeni currency

Saudi Arabia leads a military coalition that intervened in the Yemen conflict in March 2015 to support the internationally recognised government president Abdrabu Mansur Hadi .

More than one million civil servants lost their jobs in 2016 when Mr Hadi moved the central bank from Sanaa to Aden.

For more than a year, the government has been unable to pay salaries and the rial dropped sharply against the dollar, leaving Yemenis unable to afford food staples and bottled water.

The UN aid agency Ocha said on Sunday that 11.3 million Yemenis "urgently require assistance to survive".

"A generation of children is growing up in suffering and deprivation," Ocha said in its appeal, made on behalf of UN agencies and humanitarian partners.

"Nearly two million children are out of school, 1.8 million children under the age of five are acutely malnourished, including 400,000 who suffer from severe acute malnutrition and are 10 times more likely to die if they do not receive medical treatment."

More than three-quarters of Yemen's population - 22.2 million people - are now dependent on some form of assistance in Yemen, the UN says.