No hope for the poor [Archives:2005/856/Opinion]
As part of the Economic, Financial and Administrative Reform Program, the government is undertaking a parallel program to combat poverty and to meet Yemen's commitments to the Millennium Development Goals by 2015. This program is important, because it is recognized by both the government and the donors that executing EFARP is bound to lead to difficulties for the poor. However, notwithstanding the many merits of the Poverty Alleviation Programme, as the United Nations Development Programme calls it, or the Poverty Reduction Strategy, as the Yemeni Government and the World Bank call it, the truth of the matter is that the trend appears to be for an increase in the level of poverty, if not to remain at its existing level of 40-50%. No one is really sure of the present level of poverty in Yemen as estimates range from 30% to 50%, but judging from the rise in prices lately, it seems certain that the prospects are not good, at least for the near future. Already much of the middle class has found it difficult to grow or even hold on to whatever gains it might have made when Yemen did enjoy a certain boom in the mid and late Seventies. Incomes have dwindled to a fraction of their purchasing power, although they have seen some growth in numbers and now with the latest surge in price hikes, it seems that even the proposed Wage and Income Strategy will not be able to insure that government employees will be earning the incomes they need to keep up with the cost of living.
While Yemen should be enjoying the fruits of rising oil prices in the international market, many economic experts are at a loss to explain why there is a decrease in the exchange rate of the Yemeni Riyal in the open market. The current strong reserve position of the Central Bank of Yemen, is adding more to the difficulty in explaining why the YR position is weakening. Moreover, the lack of moves by the Central Bank of Yemen to ensure the stability of the Yemeni Riyal, at least temporarily, until a more durable solution can be contrived, is again raising questions about the ability of the government to react constructively to unfavorable economic developments. Even with the slight devaluation that the YR has witnessed over the last couple of months, where it declined to a low of YR 196 for each US Dollar, until CBY interference retracted the rate to around YR 192, the high rise in prices is beyond finding explanation in currency devaluation only.
Other justifications are being made in the possible General Sales Tax that has been moving in and out of different government chambers, but the GSA has yet to be implemented and the increase it should pose in prices should not exceed 10 – 20% in the worst of cases. Yet the prices have gone up as much as 50% in many commodities and goods and this is really impossible to understand, let alone absorb, especially as the government still has a number of doses to carry out under EFARP, many of which will certainly have an effect on prices, such as the reduction or elimination in subsidies for fuel products, especially diesel. Suggestions are also heard that the Houthi “Rebellion” is to blame, but the fact is that price increases became felt when supposedly the strife in Sa'ada has become to a certain extent contained, if not ended as the government claimed.
The observer can not fail to sense the hard times that the general public is beginning to gear up for, without really knowing what they can do, as they see their incomes dwindle and their ability to meet the ever increasing costs of living turn into a nightmare.
Over the past year alone, meat prices have gone up 50% and fruits and vegetables are fast approaching luxury item status left only for the affluent to enjoy. A little more than a year ago bananas could be found at 3 Kg for YR 100, but it is not uncommon to see them sold for YR 150 per Kg nowadays. Are the Yemeni people returning to an era of deprivation again, as not only are the amenities of life becoming further away from reach, but also the essential nutritional commodities that are needed for adequate nourishment. The lack of even the slightest attention to these perplexing economic developments is not helping the public becoming reassured that these are passing hues and the prospects for the future are for effective relief from the ever hardening challenges of meeting the needs for sustenance.
The situation is made the more difficult by the fact that those holding the reigns of authority are not feeling the strains that the majority of the people are facing as they endeavor to balance monthly budgets and assure that their families can at least prevent falling into the pit of perpetual poverty, if they haven't already, as a result of the previous doses that EFARP has brought on. We believe that the government has some very worthwhile programs in the fight against poverty (Social Safety Net, etc.), but even the officials of these programs and the donors behind them are skeptical of suggesting that they are sufficient to bring hope to an increasingly bewildered population. There is little stimulation of productive economic activity that can be harnessed by greater accessibility to resources by the general population, as the observer can not fail in noticing that most economic activity is still under the trusteeship of a relatively small element of the population: a mix of cutthroat merchants and government officials who have established strong niches in private capital control that leave little room for anyone else to have access to. Political stability can only be guaranteed by a reassuring economy and without such an environ, the future becomes far less predictable for both the well off and the increasing numbers of the poor.
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