How to plan for,Achieving development objectives, link to human development? [Archives:2005/845/Business & Economy]

May 26 2005

Mahyoub Al-Kamaly
Is it possible to talk about realization of development goals in Yemen general? Why is there much talk about human development while poverty is increasing in the Yemeni society? How can equality in development be achieved while there are segments of the society that have attained richness through activities practiced on the margin of small investments? Why are indicators of local development receding against the Yemeni government efforts aimed at realizing the millennium development?

To subjugate these questions to define the concept of development we have to go back to the many schools of development of their types and perceptions they are founded on in order to learn and know the successful methods for achieving comprehensive development goals. There are several schools in this area, for instance the progressive development on which spiritual or progress development was founded that eventually formed the foundation for human development. There are also many types of economic, social, cultural, spiritual and psychological development between two major poles: the natural development and human development, development of resources and development of capabilities. There is also a temporary development for a limited purpose, short-run and long-term sustainable developments. There is a development based on dependence on external funding, planning, supervision and another self-reliant development. There is an autocratic or bureaucratic development and another that depends on popular participation. The question is which type of development isprevalent in the government plans for Yemen?

It is known that those types of developments are not without ideologies, between socialist and capitalist, national and regional and globalization. This also applies to development plans followed in Yemen that are not without mixture of these concepts forming official plans containing projects supported centrally by the state, by donors from outside and those of a mixture between concepts of means followed for the implementation of those plans. So what types of development are suitable to our society?

Comprehensive development plans should depend on scientific studies to determine the volume of revenues and ways of developing them. With the expecting drop in production of crude oil from 154.4 million barrels in 2004 to 144.56 million barrels in 2005, the oil sector is expected to witness a negative growth while other economic sectors play an essential role in achieving the development targeted for the next year at 4.1%. Hence, there could be some prophecy about indicators of verified growth of development in our country and their reflections on human development. Reduction in the national return means a drop of investment projects, resulting in a decline in levels of income and increasing numbers of the unemployed. The government says it is seeking in this year to limit the spread of the phenomenon of poverty by continuing to raise the volume of expenditure on projects of infrastructure and social services as well as focusing on the investment program of the social safety net that mainly depends on the element of labour. The endeavour for improving the investment in environment contributes to motivating and pushing the local and foreign sector to invest in productive projects, with the provision of new job opportunities to be expected. In the light of that, a recession in the volume and proportion of unemployment compared to their present levels is expected.

It is obvious that there is deficiency in linking the drop in the level of oil production, its revenues and its negative reflections on labour situations and proportion of unemployment in the market .

While economic expectations reveal that the inflation rate of the gross domestic product of non-oil sectors would decline, it is also expected that the average of inflation this year would also decrease lower than its level in the years 2003 and 2004 that was recorded at 10.8% and 11% consecutively. Thus, it is expected not to exceed 10%, meaning that the development plans indicate the stay of inflation at a level of 10%, which is a negative average and development plans should be drawn up for ending it.

Expectations indicate that the rate of monetary supply growth for this year would drop from 18% in 2004, to around to a lowest of 16% in 2005. This would contribute to the decline in the rate of monetary liquidity growth and receding the average of the overall demand growth that would help limit inflationary pressures during 2005 compared to 2004. Nevertheless, the development plan has not tackled the problem in a radical manner.

Prospects of the balance of payments for the year 2005 indicate that revenues of commodity exports would drop from $4232 million in 2004 to $3754 million in 2005, at a negative rate of 11.3%, due to the reduction in local oil production at a time it is expected that imported goods would continue their rise from $3762 million in 2004 to $4025 million in 2005 at a growth rate of 7%. This would produce a deficit in the balance of trade and a simple deficit in the current account. The improvement expected in the condition of capitalist and financial account would achieve limited surplus in the balance of payments in 2005 when there is an expectation of a rise in its surplus from 10 million dollars in 2004 to about 208 millions in 2005 as a result of a drop in oil companies remittances paid to abroad due to recession in their revenues.

In the light of what has been mentioned above, it is clear the extent of Yemen's economy depends on the sector of oil and oil revenues, as they are at present considered the essence it depends on to cover its requirements of the foreign currency and significant revenues of the public budget. This matter dictates on the government of Yemen to work on rectifying the course of development plans to correct the situation and realize positive rates of growth at the level of human development.