World Bank president’s warningBig reforms needed [Archives:2005/818/Front Page]

February 21 2005

In his visit to Yemen last week, World Bank President James D. Wolfensohn warned of the urgency and extreme necessity for much-needed policy reforms to have the country move forward.

Hinting about the country's poor economic conditions, Wolfensohn also clearly highlighted the fact that Yemen is still mostly underdeveloped and with a population that is mostly illiterate, particularly among females.

He continued to describe the gloomy picture of the country in terms of high unemployment and a population growth rate that could result in an economic catastrophe in the long run.

Action needed urgently

Wolfensohn said that it was not enough for the government to analyze and realize the situation and the needs of the country, but he stressed that it is about time to improve the investment climate and promote good governance and enhance employment opportunities.

The government has in the past continuously said that it knows the problems and its solutions, but so far no concrete action has been taken to implement urgently needed reforms

Wolfensohn also warned that Yemen is depending too much on oil and could face severe economic difficulties if other sources of income are not introduced. He noted the need to maintain macroeconomic stability, and also improve water management. It is noteworthy that Yemen could face a disastrous water shortage crisis within a decade if proper precautionary measures are not taken.

However, amid the many urgencies that Wolfensohn mentioned, he also did note some positive elements in the country, mainly represented in the 'commendable' work in the Social Fund for Development and the Public Works Project.

Even though according to Wolfensohn, Yemen “has one of the largest project portfolios in the Middle East and North Africa,” this support of the world bank cannot be effective unless the Yemeni government improves its portfolio performance and carries out much needed policy reforms in areas such as governance and civil service.

Wolfensohn also encouraged the government to go on with its proposed reform plan in energy-pricing, which would result in a hike in the price of gasoline and diesel up to 50% and 100% respectively.

However, he did mention that such reforms should only carried out simultaneously with projects to relief the poor in the society and prevent as much as possible the backlash of such a hike on the vulnerable in the community.

Opposition outraged

Meanwhile, opposition press slammed the visit of the WB president, saying that he is only here to exert greater pressure on the government to speed up the process of energy reprising reforms including the expected raise in essential fuel prices.

This measure is expected to result in an outrage among the public potentially sparking protests that some analysts think could become violent.

Wolfensohn, along with Ahmed Soufan, Minister of Planning and International Cooperation and Judge Ahmed al-Hajri, Taiz Governor conducted a visit to the Project of Municipal Amelioration and Protecting Taiz from Torrents Disasters.

The WB has contributed some $76 million to the project for phases I and II. About 85 per cent of the second phase has been achieved.

Other projects in different areas in Taiz were visited including housing project which consists of 240 housing units with facilities at a cost of $2.7 million.

The officials went on a trip to Taiz suburbs seeing the urban expansion and tourist attractions of the city.

They also visited the photo and data show prepared by the PMAPTT, Public Works' Project and Social Fund for Development displaying graphs and photos on projects implemented co-financed by the WB.

The officials also visited Martyr Ne'amah Rassam Girl School where they were received by Dr. Mahdi Abdul-Salam, Director of the Province Education Office.

The WB official attended a number of cultural activities and reviewed a show for girl's drawings and handcrafts. He also reviewed list of educational projects to which the WB contributed.

There are future projects such as construction of more educational establishments and complexes in addition to a campaign to raise awareness and linking the community to the school so as to encourage girls to go to schools. There is also a plan to equip schools with language, computer and scientific labs.

World Bank support

The World Bank has been supporting Yemen's efforts to fight poverty since 1971. To date, the Bank has approved a total of 136 projects and supplemental credits, totaling over US$ 2.4 billion, of which US$ 1.7 billion (or 71 percent) have been disbursed.

At present, there are 19 projects supported by the World Bank under implementation and 6 others under preparation. The current portfolio has projects active in the areas of health, education, water resource management, infrastructure and public sector management.

The Bank will shortly start the preparation of the next three-year Country Assistance Strategy (CAS) for 2006 – 2008 in consultation with the Government, donor community and civil society.

At US$ 510 income per capita, Yemen is among the poorest counties in the world and consequently receives financial assistance from the International Development Association (IDA) – an arm of the World Bank Group – on concessional terms. Projects financed by IDA are interest-free development assistance to the poorest countries that have a maturity of 40 years, including a 10-year grace period.

The World Bank delegation accompanying James D. Wolfensohn during his visit to Yemen included Christiaan Poortman, Vice President for Middle East and North Africa; Mahdy Al-Jazzaf, Executive Director; Emmanuel Mbi, Country Director for Djibouti, Egypt and Yemen; and Mustapha Rouis, Country Manager.