Second Five-Year Plan Approved [Archives:2002/03/Business & Economy]

January 14 2002

Mahyoub Al-Kamali
The Yemeni economy entered a new stage after the parliament and the Shura Council approved the second Five-Year-Plan (2001 – 2005). The joint committee set up by the parliament and the Council made a number of remarks with regard to improving the living conditions, as well as the social care network and developing the domestic resources. The overall cost of the projects to be launched within this plan is YR 2,449,723,000,000.
As the government has failed to implement a series of projects, including the creation of a stock market exchange and a project to export the liquefied gas, the parliament and the Shura Council called for working out new mechanisms to implement the crippled projects. The second Five-Year Plan expects an annual increase in the local production by 5.6%; while the expectations of the first five year plan was an annual increase of 7.2%. However, in practice the economic policy achieved a growth that had not exceeded 5.5% of what had been expected in the first Five Year Plan.
The remarks of the both the parliament and the Shura Council stressed the necessity to introduce administrative and judicial reforms to fight corruption, alleviate poverty and to combat tax and custom evasion. The second Five Year Plan also predicts an annual intermediary growth for the gross domestic product GDP by 8% and an increase in public expenditure by 12% for reforming the salary payroll. The remarks of the committee further stressed the importance of bypassing the irregularities that appeared in the first Five-Year Plan in the following domains:
Establishing infrastructure projects so as to boost the national exports,
Promoting the establishment of projects in the rural areas so as to curb immigration from the rural areas to cities,
Promoting the projects of the Agriculture & Fish Promotion Fund so as to grant loans to farmers and fishers,
Consolidating efforts to encourage the tourism sector for more active participation in the domestic product, and
Outlining policies for promoting industries that depend on locally produced raw materials.
The priority area of the second Five-Year plan is attaching importance to mobilizing the resources through the local councils and enhancing the administrative and financial decentralized system of governance. Similarly, the plan aims at reducing the population growth rate to 3%, a rate that had remained at 3.5% during the first year plan.
It is expected that the population will roughly mount to 21 million in 2005. Thus, the joint committee of the parliament and the Shura Council recommended the government to render more care to the health sector, particularly in the rural areas and to create a good insurance system for the civil servants and the militaries. Furthermore, the committee recommended the government to attach importance to the government-provided basic education and supporting the Social Fund for development, the National Program for the Development of Productive families plus financing the projects implemented by the Public Works Project.
The plan expects an increase in the individual income from YR 75,276 in 2000 to YR 84448 in 2005 as an annual average growth rate of 2.3%. The plans data indicates the weakness of the role of women in the economic field, as it only represents 22.7% most properly owing to the high rate of illiteracy. Consequently, the plan attaches importance to the issue of human resources development through raising the expenditure on education. As far as the financial sector is concerned, both the Parliament and the Shura Council urged the government to maintain stable financial and exchange rates, activate the Exchange Profession Law and to limit the speculations at the exchange markets.
The plan also aims at controlling the inflation at a rate that does not exceed 6%. It is also expected that the plan would achieve an annual surplus rating at YR 72.557 million in 2005 and an overall surplus of YR 457.8 billion. Nevertheless, the most important challenges facing the plan is the concentration of 74% of the population in the rural areas plus the water problem.