Parliament members furious over poor management of economy [Archives:2008/1131/Business & Economy]

February 21 2008

Following Prime Minister Mujawar's presentation to the parliament regarding the economic achievements of his cabinet during 2007, parliament members expressed fury and anger at the poor performance of the government, given the record inflation experienced during the year. The prime minister started his presentation by highlighting the economic growth and developmental achievements during the last three years, but he also stated that economic growth has declined from 3.6 % in 2006 to 3.2 % in 2007. He also explained to the parliament that the government is suffering from immense pressures due to the decline in oil production and in turn revenue.

Removal of oil subsidies

The Prime Minister also added that the government will be forced to remove oil subsidies due to the cost of the subsidies on the government budget; he stated that in 2005 subsidies constituted 23.5 % of the budget, dropping to 21.2% in 2006. However, he added that in 2007 the subsidy will exceed 30 % due to the increases in international oil prices. He also added that the World Bank states that less than 23% of the subsidy benefits the population living under the poverty line, indicating that the other 75 % of the subsidy simply goes to smugglers of refined oil products to outside the country. The prime minister also added that the government of Yemen has failed in putting a stop to five oil and diesel smuggles who smuggle refined oil products out of the country.

“I am not saying that we will remove all oil subsidies immediately, but I wanted to inform you about the challenges the government faces including the fact that 6000 billion Riyals of oil subsidies isn't going to the poor, but only 4 % of subsidies is” the prime minister stated, adding that the government needs the help of the parliament in making the decision to remove oil subsidies.

In response, parliament members strongly opposed the notion of removing oil subsidies stating that the increase in oil prices will be accompanies by a price hike in all other products, which will increase inflation and become an economic and social catastrophe. Head of Al-Ishah parliamentary block Dr. AbdulRahman bafadhl stated that the Yemeni public will not be able to tolerate any additional increase in retail prices. While the head of the socialist parliamentary block Dr. Aydarous Al-Naqib stated that removing the subsidies is the opposite of what the public is expecting from the government, adding that holds the government responsible for any consequences of removing the subsidies, demanding that the government holds the corrupt officials and those who misuse public resources accountable and punish them instead of punishing the Yemeni people. He concluded his remarks by saying “we, and the government, complain of corruption but we've never heard of holding any corrupt officials accountable”.

Even parliament members of the ruling party were disappointed at the prime minister's justification for removing oil subsidies, saying that the smuggling of oil is done through tankers coming to Yemeni ports and sailing across the sea, not smuggled by donkeys which the government cannot trace. While other parliament members denounced the government's inability to put a stop to organized oil smuggling, unless the smugglers are a part of the government itself.

Parliament members mistrust in government

Parliament members continued to attack the prime minister's presentation and government economic polities, MP Abdullah Al-Badani stated that he always feels suspicious and horrified whenever the government visits the parliament to present its achievements. He stated that he cannot see the economic progress the government is referring to while the value of the Yemeni Riyal is collapsing as opposed to other currencies, stating that the government economic policies are similar to a missile attack that aims at the destruction of the country, calling on the government members to go to the street and see the thousand who eat out of the garbage.

MP Sakher Al-Wajeh inquired why does the government have a monopoly on a single entity in importing refined oil products, adding that the government's reliance on treasury bills to control the supply of money is a sign of economic failure. He also demanded an explanation why the government has monopolized import of scrap metal to only two selected businessmen, in turn driving many others out of business. MP AbdulRazaj Al-Hajri also commented on the prime minister's achievement in giving raises to seven thousand retired political security officers, and said that we need seven thousand bakeries to feed the people, and this achievement is no achievement at all and the government needs to reprioritize.

MP Abdulkarim Shaiban stated that the economic development mentioned in the prime minister's presentation is simply a myth and un true numbers, adding that the government has failed in preparing a business environment that succeeds in attracting investments, as evident by the declining investments coming to Yemen. He also added that the privet sector has become tired of continued restrictions on business and additional taxes.

Several other parliament members criticized the government for providing inconclusive information relation to other issues including security issues and the unrest in the south which have a direct baring on the economy. MPs also demanded that the prime minister revises his report and includes detailed information on the price hikes, how the proposed subsidy funds are going to be used if the oil subsidy is removed. The prime minister promised to resubmit his report in mid April.