[03/August/2010]

By: Mahmoud Assamiee

SANA'A, August 03 (Saba)- As the countdown of Sha'aban days starts to receive the holly month of Ramadan, foodstuff prices are soaring to add another burden on the life of the Yemeni citizen, who is already suffering deterioration of his income.

People rush to markets to by Ramadan things; different types of foods, kitchen tools and cloths. They complain of the great increase of prices of foodstuff this year.

"This Ramadan the prices of foodstuff increased sharply comparing to last year," said a citizen who works in public sector. “last year I bought Ramadan things for YR 6000 and this year I bought the same things for 10, 000," he added.

Merchants also complain of the prices hikes this year of all foodstuffs, especially those imported from outside the country due to soaring prices of dollar.

"Every thing has increased," said Samir Ahmad, a wholesaler and retailer in Al-Hasaba central market. The increase started soaring during these weeks when dollar prices hikes started. The increase covered sugar, flour, wheat, milk, ghee, eggs, cooking oil and every product.

He explained that the price of flour increased from YR 3900 to 4700, for every sack of 50 kilogram. The six kilograms can of ghee increased from YR and the box of yogurt from YR 1100 to 1200. The price of a can of yogurt contains 500 grams raised from 100 to 120 rial.

Milk registered the highest hike within four months as the 25 kilograms sack of powder milk increased from YR 14500 to 23000.

However prices of some Yemeni products like spaghetti and yogurt are still the same as Yemeni products have increased only by five percent, according to Al-Adib.
Meanwhile the price of dollar is still continuing in increasing to reach 246 YR for one dollar, despite the Central Bank of Yemen’s interference to keep the price of dollar stable. It has interfered nine times since the beginning of this year to keep the price of dollar down but it could not.

In Tuesday regular meeting for the cabinet, President Ali Abduallah Saleh chaired this meeting and ordered the government to fix the price of rial against the US dollar. He stressed on the role of the ministry of industry and trade to fix the prices of goods and deter those who play with them.

The president directed the government to find solutions to face economic hardship and encourage non-oil alternatives to boost the economy. He argued the government to encourage investment as important pillar of development.

While the Central Bank of Yemen refers the soaring prices of dollar against the rial to the great demand for the dollar by merchant to buy Ramadan and Eid’s goods, economists refute these claims and affirmed this thing is expected. They accuse the bank of adopting bad policy as it pumps the hard currency to the markets by lower prices and big merchants buy them and selling them by higher prices.

Professor of Economy at the College of Commerce and Economy at Sana’a University Mohammad Jobran refers the deterioration of the rial against the dollar to several factors; lack of wise funding and financial policy, political and security disorder and the corruption in collecting the currency and selling it outside the country.

He also argues that merchants who do not pay the taxes to the government have plenty of money and now they are transferring their money outside the country, absence of investment and some traders selling their goods by dollar are other reasons behind the devaluation of the rial.

He criticized the CBY measure of pumping the money to the market as the commercial banks buy the money and transfer them outside the country and CBY cannot control this.

Deputy Minister of Finance Ahmad al-Fadhli revealed told the parliament in a session held last week on the deterioration of the Yemen Rial that the current financial policy will lead to more devaluation of the rial.

He expected that the public budget deficit would reach YR 500 billion during the coming period noting that the government in the past used to depend on non-secured sources to fill the gap of deficit and that the allocated money of commercial banks to invest in treasury bonds in the CBY are not enough to fill the deficit gab.

Al-Fadhli added that the false state policy in supporting oil derivatives cost the country YR 291 billion in six months clarifying that the total fund of supporting the oil derivatives reach YR 600 billion which means oil revenuers do not cover its buying.

In its meeting with the Association of Yemeni Money Exchangers on Monday, the Central Bank of Yemen and exchangers agreed on fixing the price of dollar at YR 240 for one dollar in selling and 239 in buying.


Saba