Gov’s economic reforms inflame feelings of the poor [Archives:2005/863/Business & Economy]

July 28 2005

Mahyoub Al-Kamaly
The violent protests witness across Yemen a few days ago emphasized that poverty is still having its influence on the Yemeni society, and that the reform dose taken by the government to fill the gap in the deficit of the State's general budget constituted a time bomb and made people vent their anger at the government.

The opposition's keeping away from leading the riots caused violence and vandalism encouraging rioters to throng streets and attack public and private properties.

The government is said to have taken procedures in favor of the poor. “levying a tax on sales is due to yield positive results to be won by citizens in the economic and social sectors, and that the recent amendments reduced the tax on commodities and services from 10 to 5 percent, said Ahmad Ghalib Taxes Authority Undersecretary. “Cutting sales tax has its positive consequence on the prices of different commodities and services.

Protesters have been facing a wave of price hikes, even on the commodities exempted from customs and taxes and resorted to defend their livelihood, not taking for granted the government work on protecting the domestic products harmed by trafficking activities. The government, in addition, intends to boost the economic activities, create more job opportunities and contribute to restoring the lost fees and taxes because of trafficking. This strategy aims to improve the level of services offered to people and ensure the basic needs and the vital projects necessary for the process of development.

The Yemeni Society for Consumer Protection (YSCP) expressed its strong denunciation at the government's decision to lift subsidy on oil derivatives: diesel, petrol, kerosene and gas, and this doubled the prices of fuel.

In a press release recently distributed, the YSCP, being a representative and defendant of consumers, stated the government's decision lead to sharp increases in the price of various commodities and therefore beyond control of the parties concerned. Price hikes prevailed the Yemeni markets during the first half of the current year, worsening life of the poor and those of limited income who constitute the majority of Yemen's population.

Raising the price of commodities and services has extorted the consumer three of his/her rights that are ensured by the international conventions and national laws: the right to live safe, the right to obtain the basic needs and the right to express oneself. Having a glance at these rights, the government has to cancel its decision that skyrocketed prices of various commodities.

The YSCP considered justifications shown by the government as objectively unauthentic. It added, based on real life situations, what the government calls “price reforms” being implemented over the last ten years, never helped improve living standards of people. Unfortunately, the government's price reforms contributed to deteriorating the livelihood of citizens both in urban and rural areas.

The YSCP held the government accountable for the price increases and extra burdens on citizens caused by its decision that removed fuel subsidy.

The national economy with encouraging development can not be achieved with raising the prices of basic commodities, rather it can be done though a better management of the government's apparatuses, in addition to eradicating corruption.

The YSCP denounced violence and vandalism that left several victims and condemned the chaotic acts that accompanied demonstrations prompting the smashing of properties. The barbaric acts and the irresponsible behaviors resulted in heavy losses estimated at millions.

Economic experts described the government's decision to remove fuel subsidy as of no futility from the economic point of view, particularly in the shadows of the difficult conditions coupled with economic recession and political and security problems experienced by the country.

Officials sources said the procedures recently taken by the government are partial and there is still a fuel subsidy estimated at YR272 billion (billion and half a billion U.S. dollar)

The sources hold the view the government's decision will help add over $700 million annually to the State's general budget. They added if the government did not take such a decision, the fuel subsidy will reach $716 million by the end of the current year and raise the gross domestic production's budget deficit to 13%. According to official sources, Yemen imports 60% of diesel and 9% of petrol to meet the rising demand of the local consumption.