Business

Unprecedented Rise in Domestic Public Debt

National Yemen

Yemen central Bank

By National Yemen

Financial statements reported a strong increase in the amount of domestic debt in Yemen during the last year. It was reported that the Yemen’s current debt has reached over 1 trillion YR compared to 780 billion YR in 2010.

Analysts believe that the increase was driven by excessive borrowing by issuing domestic treasury bills to cover the government expenditures during Yemen’s political crisis.

In a related matter, a press release from the Central Bank of Yemen showed a slight decline in the external debt to reach over 6.07 billion US dollars compared to 6.14 billion US. This decline is indicative of how institutions and international lenders suspended much of their assistance during the crisis.

In this regard, Yemeni economists expressed their worries regarding the domestic debts because it comes with a high price tag. According to the economists, the interest rate to hold such an amount of money is high and in turn, directly places more stress on the budget. The economists argued that the paralysis in Yemen’s general revenues makes this situation all the more worrisome.

Former Minister of Finance Saif Al-Asali stated that the increase in the domestic debt in Yemen threatens the internal balance in the country. He added that the general average of domestic debt reached 40% while the external debt reached 30% of the local production. Debt combined, he said, would account for over 70% of the local debt and will create larger risks and loses for the Yemeni budget.