Unsuccessful Economic Reforms, Increased Prices of Basic Goods and Unreal Budget for 2000, All to Be Endured by the Yemeni Citizen [Archives:2000/52/Business & Economy]

By: Jalal Al-Sharaabi
Yemen Times
The economic conditions of the Yemeni people are passing from pillar to post with the passage of time. One would easily notice that the number of people below the poverty line has also increased dramatically. Unemployment is a terrible nightmare, paining many people. It has come to be in direct correlation to economic reforms.
Each year we witness a new list of food supplies prices having changed from the previous one made the year before. Naturally, the new list is different from the previous in terms of increasing the prices of these basic goods. Despite unrestrained attempts to retrieve the situation in terms of treasury bonds and privatization, these efforts have failed and could not stop the deteriorating tendency of our currency.
Smuggling huge budgets for the military bodies, the officials indifference, in addition to the non-existant control over the public property, are all monsters continuously frightening the Yemeni people, especially in the current crisis at the regional level, in which economy is the severest weapon ever used against Yemen.
Not only this, for our currency has also fallen against the Dollar and this has brought about a decrease in the real wages of employees. The basic food supplies prices have also risen, especially after the government removed the subsidization. The government should have dedicated the money of subsidizing these goods to investment. And though there has been a large increase in oil prices and an increased number of the newly discovered oil fields, the revenues of all these still have a mysterious destination.
Generally speaking, the Yemeni markets suffer from a terrible hoarding of goods, most of which have already expired and others are about to and are suspected to be convenient for the humanly use. One of the main factors that help increase the spread of these goods is the non-existence of health control that should be conducted at boarder check points as well as sea ports.
The General Budget for 2000 showed that the government is going on in its policy of allocating new funds for security and the military at the expense of education, health, and development.
Statistics of the past five years show that there is an increase in the ratio of current revenues, including taxes, Zakah, charges on external trade, services revenues such as agricultural revenues, houses, transportation, social services, services of justice, security, education, health, media, tourism, culture, and that of the government’s benefit from minerals and industry overall benefits. Despite all that, economic conditions remain as deplorable as one could imagine. The Yemeni citizen remains a victim to these economic reforms, which reform nothing but destroy everything.
The returnees from the Gulf countries during the Gulf War in 1990, after Iraq’s invasion of Kuwait, and the Yemeni government and people taking sides with Iraq has caused the Saudi government to drive away the Yemeni employees working there and led to an increasingly heavy burden that tires the shoulders of the Yemeni government. Besides these economic hardships the monetary liquidity used to be available by those emigrants has come to an end. After their return, the prices of basic food supplies for 1997 and 98 tended to increase visibly. Prices were different from one governorate to another for example, a box of fruits weighing 17kg used to cost YR 1950 in 1997 at Ma’areb. However, in 1998 it has gone up to YR 2150. The same thing was applicable to all types of fruits. Differences of prices were dominating among the governorates, for a ton of iron 12ml used to cost YR 41750 in 1998 at Hadramout while it reached to YR 45227 at Abian in the same year.
The continuous rise in prices of oil products and mineral articles is another burden that the Yemeni citizen have had to encounter and accommodate with an increase of prices of essential food supplies such as flour and wheat.
The Yemeni government has many times declared through its Prime Minister and Minister of exterior affairs that economic conditions are in a tight situation and that there is a deficit reaching billions of riyals, asking the people to follow austerity measures. Moreover, the government went on in its attempts to solve this crisis and stopped importing white wheat because red wheat is cheaper. However, despite all this, year 1999 witnessed a terrible drop of our currency and the sack of flour has run from YR1400 to YR1700. The Yemeni authorities have determined to stop the continuous rise of the Dollar at the expense of the Yemeni Riyal, so it tried all that it could to stop the price of Dollar at YR160, however, the price has not stopped and reached YR170. The Central Bank justified this by saying that this was a result of some exchangers’ and merchants’ behavior who play with these prices.
Economists show that these are not the real solutions for there are intermingling factors and reasons that brought about this crisis. They also asserted that there are some ministers and high ranking officials who possess huge funds and other money, they get out off some projects they purchase, tend to invest their fortunes in speculative projects with dollars.
They added that the reasons that have aggravated the situation are the government’s procedures conducted to free the basic goods out of its control. The government has lifted its subsidization that used to reach to $ 500 million. This has caused many merchants to compete to get Dollars so that they can import these basic food supplies, consequently adding insult to injury.
The Central Bank’s in a face-saving action to save the position of the Yemeni riyal by having put $10 million into circulation, the market had also come through. For it was soon used for speculation rather than supporting the monetary market.
Uncertain sources reveal that regional countries are also involved in leading the Yemeni economy to this deplorable position in involving some of its agents in speculation by withdrawing dollars from the local market and supplying more Yemeni currency.
All these factors have made prices of goods unstable and on the increase. A lot of revenue that should come to the public treasury come to be wasted and exploited by different, mysterious sources. For example, statistics show that due to smuggling operations the government lost YR70 billion during 1999.
The Yemeni market has been dominated by different imported goods most of which being illegally brought into the country, reaching to more than 120 items of goods during Ramadan. Besides, some are not suitable for the human use as testing revealed.
A law was passed this year by the Cabinet to increase the cleaning charges on business shops and general services by 200% which has obviously increased the suffering and the agony of citizens who have become a bearer of these aggressive laws.
The Yemeni people have still been optimistic that economic conditions in 2000 will improve as the government has promised at different times that the budget of service facilities will be increased. However, the budget draft of the government for 2000 crushed all their hopes and astounded those optimists, for the draft presented to the Parliament contained a number of fallacies and distorted facts aiming at cheating the members of Parliament. The budget also contained an increase in expenditure reaching to about YR 80 billion more than that of 1999. Security and Defense have taken 25% of this increase. Statistics show that this article has increased at a ratio of 109%, therefore security and defense will take YR14 billion and 68 million. However, the share of the Interior Ministry is around YR 2 billion and 736 million and the Political security with YR1 billion. In regard to oil revenues, the budget draft includes mysterious numbers either in terms of the real quantities or monetary figures, besides, the playing with the prices of selling the exported oil or that used locally. Moreover, the revenues of oil sold at the colanders in Aden for the new budget is also unknown though its quantity in budget 1999 was around 25,550,000 barrels.
The Yemeni government has also suffered from heavy losses as a result of 30 bombing incidents of the pipelines.
All these obstacles stay in the face of the Yemeni economy and make any attempts to retrieve the situation fruitless and worthless unless a clear monetary policy takes into account the real income of the Yemeni citizen and the cost of his living upon a healthy strategic economy.
To conclude, it is a fact that all, especially those in charge, should confess that most of the revenues of the Yemeni government are spent illegally and go to mysterious destinations where there is no official control. Besides there is no sense of consciousness among some top and influential officials. Therefore, it lies upon the government to save the national economy from destruction and from the total dependence on the economic reforms of the International and World Banks’ Funds which proved failure in most of the countries where these programs were applied to the destruction of the country itself.
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