Price reforms & currency floatingCaused retreat in the citizen’s living conditions [Archives:2003/697/Business & Economy]

December 25 2003

The wave of high prices and rise of prices rates in general compared to government measures to treat them disclose that the government is indifferent with regard to the citizen's living requirements particularly after it has flooded his life with a set of price doses and kept vainly contending with a failing program for economic and financial reforms. This is confirmed with the numbers of failure cases in all fields in addition to the rise of price rates of food stuffs.
Following around nine lean years of implementing the policy of price reforms and floating value of national currency, economic indicators stress the living conditions of the citizen retreated by 84%.
The government has utilized its potentials and local resources to gain political benefits and to throw dust of reforms in the eyes of the public, according to their description. According results of official field social surveys the proportion of food poverty rose from 9% in 1992 to 18% in 1998 and the proportion of general poverty reached more than 43% in 2003 while the rate of poor employees to 84%.
Workers say that before the government made details in drawing up a strategy for limiting the volume of the victims of its economic policies, it closed and blocked job opportunities before the work force and created a desperate living situation while it distributes income in favour of the rich.
The government policies ignoring of the labour market caused an increase in number of those looking for job opportunities who reached to 7.7 million persons in 2003 at a percentage of 46.7 of the population that is around 18.9 million people.
Therefore, the deteriorating living conditions resulting from deterioration of national currency prices during the past days came to double the volume of the victims of the policy of price reform and to produce poverty and push the thousands of families to the brink of bankruptcy.
Against this situation the government did not take measures because it did not focus its first attention to living needs of the citizen. The ministry of trade and industry did not put forward any beneficial solutions or the rise in general price rates. The Yemeni government tried to improve circumstances of the economic situations but the measures taken in 2003 focused on finishing projects of local development and efforts were concentrated on reforming financial and administrative bodies.
Investment circles see that the rise accomplished in the proportion of taxes imposed on income and production and consuming caused in delaying of finishing their projects in addition to administrative complications restraining the movement of capitals. These circles say the important thing about the economic, financial and monetary policy should have been the establishment of a stock market which had been delayed in during the year 2003 and that had led to:
-recession of dealings in the financial market that is founded on individual bases and banking shops barring monetary circulation, weakness of investors trust in the present banking situation,
– there is a difficulty in monetary dealings between the present bank market and foreign monetary markets.
Investors also confirm that the establishment of a stock market has become an important matter to adjust the rhythm of funds movement and their circulation which means the importance of joining efforts of the government with the private sector to found the stock market on studied scientific bases.
Although the committee entrusted with the establishment of a stock market has traveled a significant distance other factors are still hindering the accomplishment of the market.
Entrepreneurs and businessmen mention that the investment situation in Yemen is in need of more government support and facilities to attain the aspired for goals from investment in available opportunities for them whether in the free zone in Aden or in other areas.
Throughout the year 2003 the government has not been able to curb the chronic deficit in the state general budget that exceeded YR 63 billion and the overall deficit in the budget of the New Year 2004 has remained more than YR 80 billion. This situation means:
-weakness of developing non-oil exports,
-weakness in administrative efficiency for increasing production,
-an increase in the volume of general expenses,
-depending n the policy of foreign borrowing to implement some floundering projects,
– increase in proportion of loans interests at the expense of the state's general budget.
Hence, official circles see that there is inevitability for continuing financial and administrative reform and restructuring of floundering establishments by implementing the policy of privatization to get rid of their burdens. During the year 2003 the government has approved the privatization of a number of state establishments and offering them for sale to the private sector and that has caused an increase in rates of unemployment.

Indicators of the New Year
The government during 204 intends to introduce a new economic dose aimed at increasing taxes and customs duties and increasing prices of some important commodities such as fuels and diesel under pretexts of realizing balances in quantity and prices and wages. Despite that the government has postponed implementation of the general tax law on sales to an indefinite date during the next year, indicators of its financial statement reveal that the fresh dose would include doubling the percentage of taxes imposed according to the law of production, income and consumption and its amendments. The repeated visits of the World Bank to Yemen during the past days confirm that the next dose would be a heavy one on the people and would affect the social situations. It would cause employees, working in state projects and institutions to be put in auction sale pursuant to privatization program, to lose their jobs. Social circles express their fears of the fresh dose that could be killing of their living conditions and what remained with some of them of job opportunities.