Why Aren’t Yemenis Happy with the World Bank and IMF Reforms? [Archives:2000/12/Business & Economy]
The technical consultations of the World Bank (WB), as well as the International Monetary Fund (IMF) proposed to the Yemeni government on the implementation of the Economic Reform Program have become a stock subject of criticism and looking at them with skepticism for the majority of Yemenis particularly as for their results. Although these institutions have contributed with suggestions and support to the establishment of a networks of social security and reduction and limiting gravity of poverty in the society, they are not supported by a good number of Yemenis, especially after seeing their lives being negatively affected.
Since 1994, united Yemen has been facing deteriorated economic situations with prevailing low production, high rate of inflation amounting to 105%, over 16% budget deficit, 35% unemployment and decline in per capita annual income to around $ 275.
Reforms program was introduced in coordination with experts from the WB and IMF. It was planned that its implementation covers four phases, the first of which started in March 1995. The Yemenis, especially opposition parties assert that it has added insult to injury; more people have fallen into poverty, prices soared to high levels, measures for fighting corruption has soft-pedaled.
Opposition parties are of the view that the mistakes made by the WB and the IMF in the process of rectifying economic problems of Yemen were represented in offering conditioned funds for financing plans of the program. Thus implementation of the program necessitated that Yemen had to follow an austerity policy associated with lifting subsidy on necessary foodstuffs leading to the rise in their prices by 1500% and also led to raise oil products prices by more than 500%, electricity, water and telecommunication services by 245%. These realities and results have made Yemenis think that consultations of the WB, and the IMF have led Yemen economy to recession, unemployment, inflation and high cost of living. The people of Yemen describe these suggestions as proposed by fraudulents that have failed to do anything to rescue from collapse economies of a number of third world countries among which Chile, Argentina, Peru, South Korea and Indonesia and others.
Nevertheless it is not to be denied that proposals and consultations of those two organizations have helped decrease percentage of Yemen’s debts by rescheduling them according to Paris Club conditions and aid of the donor countries. However, Yemenis want to realize positive results reflected on the standard of their daily living and achieve sustainable economic growth.
The visits to Yemen by WB and IMF experts have become subject of sarcasm for the Yemenis because of the state of their affairs and fallback in the state performance of its services to the citizens in health, education and fulfillment of development projects under pretext of cutting state spending for facing the deficit in the public budget.
Despite this pessimism about the economic reform and donors’ consultations, the WB seems to be determined to continue carrying out the remainder phases of the reforms project, especially in financial and administrative domains. On the other hand, the government is also going on in its program of reforms.
Economists think that, in view of the present state of economic conditions, further austerity measures and rise in prices will not be tolerable, suggesting that the government should seriously study the results of the reforms program and looks for alternatives.
To conclude, Consultations of the WB and the IMF are viewed as evil by the majority of Yemenis who call upon the government to review the record of failure of these institutions in many developing countries.