[10/August/2009]

By: Redhwan al-Hamdani

Translated and edited by: Mahmoud Assamiee

SANA'A, August 10 (Saba)- Yemen's crude oil revenues have recorded sharp drop during the first half of 2009, according to state report. This period's revenues are $ 665 millions comparing to the same period last year which reached $ 2, 6 billion.

Issued by the Yemen's Central Bank (YCB), the report said the retreat is the result of government's portion decrease of the gross oil exports during the same period to 12,8 million barrel from 23,8 million for the same period on 2008 with fall- off estimated at 11 million barrel.

On the contrary, domestic consumption of oil for this period has recorded significant increase estimated at 1, 7 million barrel to reach 12, 6 million comparing to 10, 9 million for the first half of 2008.

Economists warn against the government's continuous dependence on oil as a prime strategic source generating revenues to supply development projects in Yemen. Oil revenues still represent nearly 75 percent of public budget's resources even oil production is witnessing continues decrease started by 5 percent, according to international reports.

These experts demand the government to translate its plans into real practices to develop non-oil sectors because oil exports still represent 92 percent of Yemen's whole exports.

However, other see the government still unclear in its plans to encourage at a time international reports reveal alarming results that Yemen's crude oil will be depleted in 2015.

Specialists draw pessimism that oil revenues' depletion, the public budget depends on balance of payments, without alternatives, will exhaust the state's explicit reserve currently estimated at $ 7billions mainly from oil revenues.

Government dealing with the issue

According to newsyemen website, a government source unearthed government's plans to cut down oil subsidies almost to 40 percent within plans to organize and reshuffle public expenditure in line with the national agenda for reforms 2009-2010.

The official source, who wanted his name be unearthed, indicated "increasing support of oil derivatives list under unsuitable distribution mechanism unable to reach targeted categories of development expenditure."

According to the website, the government has sought to carry out its decisions to lift oil subsidies but still waiting for "suitable time" because of political situations at this moment.
All ministers unanimously approved the government's plans to implement this "reform" and described the measure as "necessary painful solutions".

These government's statements affirm beliefs that the government is serious to implement European recommendations included in the so called "building state document". Reducing subsides on oil derivatives and shrinking the number of public employees, working in military or civil services, to the half or the third topped the list.

The document indicated sensitivity of these reforms and the unrest occurred in 2005 when the government lifted part of subsidies on oil derivatives. However it sees that drop of international oil prices will be a chance to apply this measure that leads to "providing improved chances for investments, economic growth and increasing salaries of civil service employees."

Last Saturday, President Ali Abdullah discussed with Yemen's donors government's ten priorities for the forthcoming period. These priorities include reducing oil derivatives without affection on the citizen.

Government's 2008 report showed the annual subsidies for oil derivatives are YR 759, 2 billions and YR 6 billions for electricity.



Saba