IMF Expresses Concern about Yemen’s Increasing Inflation [Archives:2001/11/Front Page]

March 12 2001

In a report issued recently, the International Monetary Fund (IMF) expressed its concern about Yemen’s increasing inflation rate. According to the report, Yemen’s inflation increased from 5% in 1997 to more than 11% in 2000. It also expressed its disappointment at the slowing pace of economic reforms since the end of 1999.
The IMF however also stated that Yemen’s economy registered growth of 6.5% at the end of 2000. This was due to the increase of oil prices, hence increasing Yemen’s revenues from oil. It estimated that the rate of growth would be 2.4% this year. Yemen is expected to export more than 59.9 million barrels of crude oil this year, which will bring a profit of USD 1.3 billion on the basis of USD 22 per barrel.
The IMF attributed the Yemeni economic slow down to the basic weakness of the businesses and investment climate. It also said that effecting any structural reform to curb poverty requires implementation of reforms at their specified stages, so as to improve the investment climate and attract foreign capital to invest in available fields. The IMF suggested tax reforms to decrease the dependence on oil revenues as the main source of income.
The government on the other hand, claims that it has covered part of the foreign debt from USD 10 billion in 1995 to USD 4.9 billion in 1999. Yet the IMF stated that economic progress is possible if the government takes strong measures to limit corruption and open the way for more investment. It also expressed its optimism that settling the border dispute with Saudi Arabia will have long-run positive effects on the economy.