Yemen’s government has said it expects to register a $1.1bn deficit in 2018, the first year it announced a budget since 2014 when the country descended into armed conflict.

The new budget set total expected revenues in 2018 at YR978bn ($2.22 billion) while spending would amount to YR1.46tn ($3.32bn), according to a report by London-based news agency Reuters.

The “austerity” budget is understood to include salaries for the military and civilians in 12 provinces that are not dominated by the Houthi rebels, which have been waging a war against Yemen’s internationally-recognised government led by President Abdrabbuh Mansour Hadi Mansour.

According to Yemeni Prime Minister Ahmed Bin Daghr, salaries in Houthi-dominated areas in the northern region of the country will be limited to the education and health sectors.

MEED understands the government has not paid most public sector salaries in the northern areas for over a year, alleging the Iran-aligned Houthi rebels have put their appointees and fighters on government wage rosters.

The government has also struggled to pay military troops and other employees even in areas under the government control due to poor security and governance in those areas.

Oil revenues accounted for over two-thirds of Yemen’s last budget in 2014. However, the three year-old war has badly damaged the sector and analysts have said exports have declined by nearly a quarter compared to their 2014 levels.

On 16 January, Saudi Arabia’s King Salman bin Abdulaziz al-Saud  ordered the transfer of $2bn to Yemen’s Central Bank in support of the country’s economy in response to a public plea bade by Bin Daghr for funds to prop up the Yemeni currency, which had lost more than half of its value against the US dollar since the war broke out in 2015.