Yemen's cabinet on Sunday approved a draft budget for 2013 that projects a deficit of 682 billion rials ($3.17 billion) and expenditure of 2.77 trillion rials, state news agency SABA reported.
The impoverished Arabian Peninsula state is still grappling with the aftermath of last year's violent political turmoil that led President Ali Abdullah Saleh to step down in February; the government has sought billions of dollars of aid to overcome financial and security challenges.
SABA said the draft budget, which now awaits approval in parliament, projected revenue of 2.08 trillion rials.
Next year's forecast deficit is 21 percent higher than the deficit originally projected by the government for 2012, while expenditure is about 2 percent higher. In April, Yemen approved a 2012 budget with a deficit of 562 billion rials and expenditure of 2.70 trillion.
Restoring stability in Yemen, which is battling Islamist militants with Washington's help, has become an international priority because of fears that al Qaeda could become further entrenched in a country which flanks top oil producer Saudi Arabia and lies along major shipping lanes.
International donors including Saudi Arabia have pledged around $8 billion in aid over the next couple of years to Yemen, which was driven to the verge of bankruptcy and plunged into factional anarchy by the year-long uprising against Saleh.
The economy of Yemen, where 40 percent of the population lives on less than $2 a day, shrank 10.5 percent in 2011, the International Monetary Fund estimated. In October, it forecast the economy would shrink 1.9 percent this year.
The official inflation rate spiralled as high as 25 percent year-on-year in October 2011; it subsided to 6.9 percent in July this year, latest central bank data show.
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