Ba Jamal’s Government and its Arduous Tasks [Archives:2001/30/Law & Diplomacy]

July 23 2001

Ahmed Sallem Shamakh
For sure, Ba Jamal’s Government is going to face a great deal of problems particularly at the economic level due to lots of unstudied or wrong decisions taken by the former governments, particularly the ones pertaining to the political war between the General People Congress, Islah Party and the Yemeni Socialist Party. These decisions have adversely affected the delicate fabric of the Yemeni economy and society. Hence, the Yemeni economy has suffered and is still suffering from the consequences of that decisions and even from the consequences of the remedies aimed for containing the outcome of such remedies. But one thing I am sure about, is that the new government which includes among its members some pragmatic ministers who are known to be honest and competent will be able to assume the duties of their posts and render solutions to the existing problems. We hope that the new government will be successful in implementing its program and this can not come true but through the adoption of well-studied remedies for the economic problems. Some of the remedies I propose in this regard is to support the local banks in attracting deposits in hard currencies through reviewing some of the existing laws and regulations of the Central Bank of Yemen (CBY). As the existing terms and conditions of the Central Bank are not encouraging at all. The Central Bank of Yemen imposes on the local banks to deposit some of their customers’ trusts to its accounts as a kind of insurance or security to insure the properties of the customers. A measure of such is good and strongly recommended but it is irrational not to give interests on that deposited amounts. This step forces the local banks to offer their customers less interests to the ones offered by the other banks around the world market and this in turn has forced the customers to deposit their money at foreign banks as the interest are higher than the ones offered by the local banks.
Thus, we suggest that the Central Bank of Yemen should offer the local banks attractive interests against the amounts deposited, or should otherwise give them strong securities issued on behalf of foreign banks against such cuts. The other problem is relevant to the policies adopted by the Central Bank of Yemen is the exchange rate and its restricts which indicate the continuity of the low price of the Yemeni Rial against the US dollar. As the amounts injected by the CBY ,from time to time, is subject to the highest bids offered and this ,in turn , lead to the rise of the exchange prices.
If the Central Bank of Yemen has adopted an orientation aiming at enhancing the position of the Yemeni Riyal it would at least contribute to stopping any sort of attraction for speculations and would contribute also to curbing the deterioration of the Yemeni Riyal.