Yemen and the need for economic assistance [Archives:2004/726/Business & Economy]

April 5 2004

Yasser Mohammed Al-Mayyasi
Yemen, during the Paris Donor Conference, held at the Headquarter of the World Bank in Paris from 16-17 October 2003, called for a genuine partnership with Yemen towards integration and to increase mutual benefits. The Yemeni delegation to the conference reviewed the outcome of economic, political, financial, administrative and legal developments Yemen had witnessed in the frame of economic, financial and administrative reforms following the 1.4 billion USD granted to Yemen by the two donor conferences held in Paris and Brussels during 1996-1997. Yemen was able to obtain promises for 2.3 billion USD to support development projects and strategic plans to ease poverty during 2003-2005.
Yemen, for years, has been seeking to achieve economic development through the implementation of economic, financial and administrative reform programs. It has achieved positive results accompanied by some problems for low-income families. However, the terrorist related security problems such as the kidnapping of tourists, the bombing of USS Cole and the French oil tanker Limburg had a negative impact on Yemen.
Yemen, since the adaptation of various reform programs, was able to achieve an economic growth rate of an annual average of 5.5%, to reduce the general fiscal budget and achieve a surplus of 7.1 in 2000 and 1.3% in 2001. The inflation rate dropped from 49.2% to 11.9% in 2001, accompanied by a stable exchange rate and the increase of foreign exchange reserves to USD 4 billion and the reduction of foreign debt to USD 4.8 billion, while achieving a surplus in the total economic balances.
With regards to administrative aspects, Yemen witnessed establishing an information database on state employees, implementing the employment census and the commencement of rationing the state administrative apparatus. It has begun the restructuring of some of its economic sectors and has made progress in detecting and eliminating duality of jobs, in addition to motivating the investment and exporting competition capabilities of the private sector and the development of ports.
Yemen, during the conference demanded an additional USD 750 million to guard its coastal areas and ports from terrorist activities and to establish a coast guard.
While Yemen receives support from foreign countries, the support received from Arab countries does not reach the expected level, considering that Yemen is a natural and strategic partner for countries in the region. Yemen continues to face investment shortages and financial shortfalls in efforts to alleviate the consequences of financial and economic reforms on the poorest sections of society. Yemen needs YR 413.4 billion during the next three years to cover expenses of the Social Safety Network and national strategy to ease poverty.