Yemen's Shura Council accuses government of failing in managing loans and grants

A report compiled by the Shura Council's Financial Committee has confirmed that the government has failed to appropriately utilize loans and donor grants to carry out various development projects.

In a meeting on Monday, October 26th, led by Chairman Abdul Aziz Abdul Ghani, the Council discussed the issues of debt, aid, and foreign grants.  In light of the report, the Council's discussions mainly focused on how to more effectively make use of these grants and loans.

The Council members charged the government to proceed with investment projects and expedite their implementation for the sake of the development of the country.  They also urged the relevant government agencies to improve the financial systems for withdrawing and managing grants and loans for these projects so that the projects can move forward quickly.

Suggestions were also made by the Council members to develop better systems for collecting and managing the country's resources in order to overcome the public deficit.  By properly utilizing the country's resources, Yemen's short- and long-term dependence on loans and non-renewable resources, like oil, could be reduced.

Ahmed al-Kohlani, the Minister of Parliament and Shura Council Affairs, said that he recognized  the importance of the recommendations made by the Shura Council, and promised that steps would be made by the government to implement their recommendations.

For his part, the Governor of the Central Bank of Yemen, Ahmed al-Smawi explained that there already is coordination concerning the management of public loans between the Central Bank and the ministries of Finance and Planning.

He also stated that the bank “focuses on international institutions for funding, because they provide the advantage of long repayment periods—up to forty years—a grace period of ten years, exemption from paying interest, and service charges of less than one percent.”

On the topic of loans, Abdullah al-Shater, the Deputy Minister of Planning and International Cooperation, pointed to certain agencies that have distinguished themselves in the effective use of loans for development, such as the social safety net.  He also discussed the measures that his ministry has taken on the issue, including the preparation of operational procedures for obtaining loans, which include government monitoring and evaluation of the process.

Speaking on behalf of his ministry, Deputy Minister of Finance Jalal Yagoup discussed the competitive bidding controls that have been established for project financing as well as new procedures for loan withdrawals which should reduce the processing time from 40 days to less than 10 days.

In addition, the Council meeting discussed the work of the Technical Committee to analyze the reasons behind the decline in loan withdrawals and ways in which the government can accelerate the completion of stalled projects.  The members also devoted discussion to the projects by the Ministry of Technical Education and Vocational Training, and the Ministry of Electricity and Energy.

In a related issue, on Tuesday the Cabinet reviewed the report made by the Technical Committee of the Ministry of Planning and International Cooperation, which was funded by loans and foreign aid.

As a result of the report, the Cabinet approved a proposal from the Ministry of Planning and International Cooperation to allocate $40 million towards building new vocational institutes.

It also approved another proposal made by the Ministry of Public Works and Roads to transfer funds from failed road projects to other more successful projects.

Finally, the Cabinet also agreed that a report should be compiled to evaluate its own effectiveness in completing its goals during the first seven months of this year.

Since 2007, the Shura Council has urged the government to draft laws concerning loans and the public debt. It has also been preparing advanced feasibility studies for projects financed by loans or foreign aid.

Its Economic Committee has called on the government to fulfill its obligations to its planned projects, and to continue to evaluate and assess the implementation of the projects so that money isn't wasted and the most use is made of the funding provided.

Meanwhile external Yemeni debt, the funds that Yemen owes to foreign countries, continues to grow and has increased to $5,894,600 billion as of the end of August 2009.  This represents an increase of $32 million since July, according to an official report issued by the Central Bank of Yemen.
 

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