Analysis of The sustainability of public finances in Yemen in light of the decline in oil production

Abstract

Public finance in Yemen faces challenges that lead to great weakness of the sustainability of public finance, increasing the budget deficit. On the one hand depends mainly on oil and gas revenues and the last of these has seen in the past ten years a significant decline in production and the volatility in prices in the international market and consequently a decline in revenues, as well as being a resource depletion in the medium and long term, on the other hand are tax revenues down relative importance in the structure of public revenues and the limited coverage of public expenditure. In contrast, public expenditure, especially current expenditure is continuing to grow which led to increase the proportion of the budget deficit and consequently high domestic debt ratio and financial burden resulting from it. The study seeks to analyze and evaluate of the structure of public revenues and public expenditures and the definition of major challenges facing the public finances and to assess the sustainability of public finance in light of the decline in oil and gas production and the limited tax resources.

The study also is trying to develop options and alternatives for the development of public resources and the restructuring of public spending so as to ensure relatively public finances and increase the effectiveness of the budget in the achievement of financial and economic stability and economic growth .The study the subject sustainability through five main axes:

1. Theoretical background of fiscal sustainability.
2. structure of the public revenue and indicators of sustainability.
3. structure of public spending and its relationship to the financial sustainability.
4. Budget and financial resources.
5. Policy and Reforms to ensure fiscal sustainability.