Ahmed Soufan: “We have come a long way!” [Archives:1999/21/Interview]
May 24 1999
The Ministry of Planning and Development is one of the key ministries of the Government of Yemen. It draws up overall guidelines for the nation’s development process, approves the investment expenditures of the government, and channels foreign loans and grants to the various line ministries.
He is also a good team player. A friend once described him as a smooth sailor, who does not like to make waves. Today, he is seen as one of the President’s close technical aides.
Given the on-going reform program of the economy, Mr. Ahmed Mohammed Soufan agreed to discuss some of his plans with Yemen Times. Ismail Al-Ghabiry talked to him and filed the following interview.
Q: Where are we with the economic reform program?
A:The economic reform program is a continuous process. We only started it in 1995.
We are continuing with the restructuring of the institutional and legal apparatus. I would say that we have shifted from the stabilization phase and moved on to the restructuring program. This involves changes in economic, administrative and financial institutions and policy of the various sectors.
Q: It seems that the economic reforms have put the country in a dilemma – damned if you do, and damned if you don’t. What do you think?
A: If Yemen had not started implementation of the economic reforms in 1995, we would not have been in a real difficult situation today. Yemen has overcome the battles of the mid-1990s, and that is no simple accomplishment. What we have done in the first phase of the reforms is address the difficulties we have had, starting in the 1980s and running through the early 1990s. These are problems which were long neglected.
I believe Yemen is really on the right track, and we have done quite well until now. But, we still need lot of effort in order to achieve all the goals of the reform program.
Q: There is a feeling the reforms are on the right track. Can you support that with numbers?
A: First of all, on the fiscal side, Yemen was really passing through difficult times during 1993-94-95. The budgetary deficit was huge, and we had lots of problems. The trade balance, the balance of payments, the fiscal deficit, and the resource deficit were all in the red. Budget deficit rose to 17.5% of GDP (Gross Domestic Product). There was negative growth rate, and a soaring inflation rate, which reached 100% in one of the years. The exchange rate was highly unpredictable as the national currency plunged.
From such a picture, only 4 years ago, look at the picture today. The exchange rate of the national currency is basically stable, albeit with some volatility. The budget deficit fell to 2% of GDP in 1997, though it rose again to almost 6% in 1998 because of the fall of oil prices, and thus our government revenue. We have achieved a growth rate of GDP in the range of 5-5.5% last year.
Q: What are your major headaches at this time?
A: We have many headaches.
Consider the following:
1- We have a 3.7% annual population growth rate. This cannot be sustained. We have to put the brakes on this.
2- The functioning of the government bureaucracy really has to be streamlined.
3- Law and order and proper dispensation of justice are both a real challenge to us.
4- The requirements of public investments are enormous. We need all kinds of investments in infrastructure, utilities, services and various projects.
Q: What kind of priorities are you working with?
A: I think we have to give top priority to human-power development. Education is critical. More than 3500 classrooms have been built over the last 3 years alone. The country’s health sector has also received huge investments. Some 6% of our over-all budget was allocated to health.
Q: Let us go back to the challenges you outlined earlier. What policy measures are you adopting?
A: The major challenges could be summarized in three areas.
First, there is the gap in gender productivity. 51.7% of our population is female, yet they are not able to contribute adequately to national production. In fact, I can say, they are not efficiently integrated in the modern economic activity.
One way to address this imbalance is to push education. Today, for every girl that goes to school, two boys get the same chance. In other words, we have to improve the chances of education for our boys and girls, but more to the point, the girls.
Second, we have the issue of population explosion. Yemen’s population grows by about 3.7% every year. This is really much too high. The female fertility rate in Yemen is about 6.7 now, down from about 7.6, but it is still one of highest in the world.
This is very alarming, as this kind of population growth will not allow sustainable development in the long-term.
Third, we have the issue of water scarcity. Yemen is one of the poorest water-endowed countries of the world. We have to take this as a fact and work together to address this matter. The government, civil society, private business, academia, the media and all other partners must work together in order to control the misuse of our precious water resources.
Q: Your ministry is supposedly in charge of future planning. Yet, we have never heard of any futuristic vision of where we are going?
A: We are now preparing some projects related to our future vision in the ministry of planning.
We are starting to prepare a vision for Yemen 25 years from now. It will answer questions like where are we going, what are we going to be, what we need to do in order to be what we want or where we want, etc. All this will be part of the Yemen 25 Vision.
We are seriously preparing for this work, as it is going to be a major undertaking and will involve lots of Yemeni experts and academics, etc.
We also have several studies already under way to look at future trends and patterns in population growth. I cannot over-emphasize the need for better family planning. So, this study will address the population issue.
In the Ministry of Planning and Development, we have embarked in preparations in those areas in terms of the challenges, goals and policies.
My ministry is now becoming more technical, more concerned with strategy than with day to day business. We are looking at the larger economic situation of the country, and advising the various line ministries and other institutions that require our advice on various policy issues on macro economic policies. We are now setting up a macro economic committee that is responsible for forecasting trends.
Q: You are also the head of the Investment Authority. Nothing seems to be happening in new private investments?
A: Well, this is a long-term objective. I would insist that during the past three or four years, the environment for private investors has improved a lot. This has helped in increasing the volume of private investment since 1995.
Our continued talks and meetings with Yemeni emigrants fall within this effort. Yemenis abroad have shown more definite interest in investing in their native country.
We are also thinking what more to do to attract foreign investments in order to augment domestic private sector involvement in the overall economic activity.
At the level of government investments, the years 1996-97-98 saw an ambitious investment program financed by both domestic resources and foreign aid. For the year of 1999, we have allocated around 33 billion Yemeni rials for new investments. We will exceed this amount by at least 20%, given the flurry of activities.
Q: The private sector complains about smuggling and laxity in enforcement the laws. How can you help?
A: Smuggling is widely spread around the world. No country can claim complete immunity from this problem.
We are trying to deal with this issue through reasonable policies in the form of traffic formulations, as well as re-structuring of customs duties in order to remove incentives for smugglers. I think a lot of things have already been done, though we haven’t been able to completely overcome this problem.
This problem not only hurts private industrial investors, it also wipes out part of government income. It also disturbs the correct functioning of the market by introducing price distortions.
The government is trying to come up with policy formulations to combat smuggling.
Q: How much assistance is available for the development process? And what are our main donor partners?
A: Yemen is one of the least developed countries of the world. The per capita GDP is less than one US dollar a day. Therefore, it is eligible for generous aid and credit conditions. Yet, what we receive is a small fraction of what other more developed Third World countries get.
Another problem is that only a few donors engage Yemen. In bilateral assistance, our leading partners are Germany, Japan and the Netherlands. In multilateral assistance, the leading partners are the World Bank, the UNDP, the EU, and UN organizations, and various international bodies. Among regional funds, the main ones are the Islamic Bank, Arab Fund and OPEC Fund.
We are constantly working to expand our cooperation with new donor partners, while at the same time retaining good working relations with our current donors.
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