Lack of Transparency and Governance in the Yemeni Government in Light of the US Financial Transparency Report 2024

The lack of transparency and good governance in the Yemeni government is one of the biggest challenges facing the country, at a time when it is experiencing complex political and economic crises. These challenges are exacerbated by the absence of a general state budget and the weakness of the oversight bodies that are supposed to ensure the stability of state institutions and the optimal allocation of their resources. The US State Department’s 2024 Financial Transparency Report is one of the most important documents that shed light on this sensitive issue, as the report emphasized a set of points that were and still are the subject of wide discussion in Yemeni circles, both locally and internationally.

The lack of transparency in Yemen has emerged as one of the most prominent structural problems that hinder any efforts made to achieve financial and administrative reforms. Although transparency is one of the main foundations of good governance, the reality indicates that there is a large gap between government rhetoric that claims to be working on fundamental reforms, and what is happening on the ground. Despite the Prime Minister’s repeated statements about plans to reform the financial and administrative system, the lack of actual implementation and political will makes these reforms mere promises that are not reflected in reality. There are several articles that I have personally written that demonstrate this, as we have always warned of the potential consequences of the continuation of this situation.

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What are the disasters resulting from the government continuing its work without approving the state's general budget?

The US State Department’s 2024 Financial Transparency Report confirmed the concerns of many observers and followers about the financial situation in Yemen. The report revealed a number of points that reflect the complete absence of oversight and accountability in the management of the country’s financial affairs, which led to increased doubts about the government’s ability to manage the country’s resources effectively.

One of the main points addressed in the report was the focus on the issue of the failure to issue general budget documents in a timely manner. The report confirmed that the government did not issue any executive reports or final reports for the fiscal year, which reflects the government’s failure to adhere to the most basic standards of financial transparency, which are essential foundations for managing public funds.

State debt

Furthermore, the report noted that the Yemeni government has failed to publish sufficient information about its financial obligations, including debts to state-owned enterprises. This opacity makes it difficult to assess Yemen’s true financial situation and prevents the international community and donors from getting a clear picture of how those debts are being managed and whether the obligations are being managed in a sustainable manner. The lack of transparency in the area of debt negatively affects the government’s reputation, as it raises suspicions about possible misuse of resources or agreements with external parties without the knowledge of the public.

Executive Offices

Regarding expenditures to support executive offices, the report indicated that the government did not disclose any precise details about these expenditures, which increases the ambiguity about how public resources are distributed. The allocation of resources to executive offices is an important part of the government structure, and when transparency in this area is absent, it becomes difficult to ascertain whether these resources are being managed efficiently to achieve the stated goals, or whether they are being used for undeclared purposes. This ultimately leads to a loss of trust between the people and the government, especially at a time when transparency and accountability are considered an important basis for building trust and enhancing stability.

off-balance sheet accounts

One of the most significant problems revealed by the report is the existence of off-budget financial accounts that are managed outside of known oversight systems. These accounts pose a real threat to the management of the country’s financial resources, as funds are allocated and used without any official oversight or transparent standards. Unmonitored accounts are not new to the Yemeni financial system, but they pose a major threat to the country’s financial stability, as they allow for widespread corruption and mismanagement without anyone being able to hold accountable those responsible for these funds.

Presidential expenses

The report also noted that the Yemeni government did not detail the expenditures allocated to support the president and his council. This omission raises questions about the government’s commitment to the principles of transparency and financial accountability, especially in light of the difficult economic conditions the country is experiencing. The lack of financial detail in this context raises doubts about how public funds are managed, and whether these expenditures are effectively directed to serve the state and the people or whether they serve the interests of a specific group without sufficient oversight. In light of this ambiguity, the government could be exposed to internal and external criticism related to financial mismanagement or corruption.

Military and intelligence expenditures

Regarding military and intelligence spending, the report revealed that these expenditures are not subject to any kind of oversight, whether parliamentary or civilian. The lack of oversight over these expenditures raises fundamental questions about how resources are allocated in these vital sectors. These expenditures constitute a large portion of the general budget, and the lack of transparency makes it difficult to ascertain how these funds are used and whether they are managed efficiently to achieve national security objectives or are being exploited for other purposes that do not serve the country’s interests. This increases doubts about how these sectors are managed and the extent of their commitment to the principles of transparency and accountability.

Financial Regulatory Bodies

The report did not stop there, but also indicated that the Supreme Financial Supervisory Institution, meaning here the Central Organization for Control and Accounting, suffers from a clear weakness in the performance of its duties. The Central Organization for Control and Accounting is supposed to be the watchful eye on state funds, but in reality it does not operate regularly and does not adhere to international standards of independence, according to the report. The lack of independence of the agency means that its ability to monitor public spending and conduct financial audits effectively is severely restricted, which makes it lose credibility in the eyes of the public.

No development without transparency

Many local and international reports, including the 2024 Financial Transparency Report, have emphasized that the lack of transparency and governance in Yemen is one of the biggest obstacles to achieving sustainable development. Development cannot be achieved in the absence of transparency, because effective resource management depends primarily on the existence of institutions capable of monitoring government performance and ensuring that public funds are managed transparently and fairly. Without these standards, talk of reforms becomes empty slogans that do not reflect the reality of the situation.

Although the Yemeni government claims to be working to improve the financial and administrative situation, the reality is that corruption and mismanagement still dominate many aspects of the state. This increases discontent among citizens and makes it difficult to achieve any significant progress on reforms. Today, more than ever, the government is required to take serious and practical steps to ensure that its institutions are more transparent and more committed to the standards of good governance.

The lack of transparency not only affects the financial management of the state, but also extends to other important sectors such as security and public services. When financial resources are not transparent, it becomes difficult for the government to allocate them fairly and serve the interests of citizens. This leads to exacerbation of poverty and unemployment, and increases political and social instability. Studies have shown that the lack of transparency contributes to the promotion of corruption and mismanagement, which are two major factors that undermine development efforts.

Yemen is certainly in dire need of radical reforms in transparency and governance, but these reforms will not come on their own. The government needs to take bold, concrete steps to ensure that its institutions are more transparent and more open to oversight and accountability. Without these reforms, Yemen will remain stuck in a cycle of corruption and mismanagement, which will ultimately deepen the country’s political and economic crisis.

In conclusion, the 2024 US Financial Transparency Report came to emphasize the urgent need for reforms in Yemen. The report not only revealed the financial challenges facing the government, but also the extent to which the lack of transparency affects all aspects of life in the country.

The Yemeni government still has a real opportunity to reform its financial and administrative system, but this opportunity will not be achieved unless there is real political will and interest from the leadership in ensuring transparency and accountability in the management of state affairs.

• Yemeni researcher and economic analyst