By: Adel Assilwi
SANA'A, May 7 (Saba)- A government report confirmed that the economic situation in Yemen witnessed during the past two years some sort of growth, suggesting hope of economic recovery and achieving positive economic growth. According to the report, the economic growth has reached two percent in 2012 comparing to negative growth reached 12,8 percent in 2011.
The economic paper presented by the Ministry of Planning and International Cooperation in the Seventh Meeting of Friends of Yemen showed that the government has been able to control the deficit in 2012 public budget that did not reach 4,8 percent of GDP. The paper referred the growth to the support of donors, especially from Saudi Arabia, which provided Yemen with oil derivatives, and to the implementation of some economic reforms.
While the paper revealed that many economic achievements have been realized and reflected in relative improvement in the national currency and fall of the inflation, it defined unemployment, poverty, limited infrastructures, attacking oil and gas pipelines and power lines, the rising costs of realizing security and combating terror, in addition to the rise of budget deficit in 2013 and 2014 as the biggest challenges faced the government's efforts during the past three years.
The paper reviewed economic development in Yemen, indicating that the budget deficit increased from 8.3 in 2012 percent to 8. 4 percent in 2014 because of additional costs for the transition (new employment, reconstruction, reparations to martyrs families and injured people, returning the forcibly pensioned people and restoring order and fighting terrorism) and the huge losses resulted by sabotage acts targeting oil and gas pipelines and electric towers and lines.
" Due to the rise of deficit and the difficult of supply from real resources, the financial situation is getting worse, a matter requires increasing revenues, reducing expenditures and seeking financing from the development partners," the paper goes on.
Fall of inflation with stable exchange rate
The report showed that the National Reconciliation Government has reduced the price of dollar to keep the price of Yemeni Rial at 215 against the dollar and increased the reserve of hard currency from USD 4.5 billion in 2011 to 6,2 billion in 2012.
"Despite the fall of foreign currency reserve to USD 5,3 billion in December 2013, the reserve are still at safe levels," the report indicates. The report added that keeping the reserve at these levels remains the challenge, especially under the continuation of sabotage attacks targeting the oil and gas pipelines, which are considered the main resource of foreign currency. The report confirmed the fall of inflation from 19,5 percent in 2011 to 9,8 percent in 2012 and then increased slightly to 10,97 percent in 2013.
The reports tackled improvements on social levels, clarifying that the unemployment rates among youth have increased to 52,9 percent. The report added that in response to youth demands, the government has provided jobs to more than 70 thousand people. Even this step was important to improve the social and living stability for people, the move represented big burden on the state budget.
The report noted that a national strategy to provide youth with work opportunities has been prepared. Furthermore, the government intends to expand the capacity of labor programs to keep pace with foreign assistances. Meanwhile, the government depends on donors' pledges for reconstructing the affected areas and carrying out infrastructure projects and basic services.
The report confirmed that the government has been able to create stable funding in goods and basic services via providing the markets with oil derivatives and improving power.
Establishing a fund for families of martyrs and injured people
The report made indicated that the government, in response to the National Dialogue Conference's (NDC) outcomes regarding the transitional justice and solution to the Southern and Sa'ada Issues, has established a fund to compensate the families of the martyrs and injured people.
Improvements in humanitarian field
The government's report deals with improvements in humanitarian field in Yemen, indicating that the available information suggest that the humanitarian situation in Yemen is still fearful and reflects suffering of huge number of Yemeni families because of unstable food prices, difficult living conditions and the increasing poverty levels.
" Millions of Yemenis in urban and rural areas are facing difficulty to get access to food, basic services and livings," said the report, noting to limited government's capability in addressing the increasingly humanitarian needs. The report shows that the response plan for 2013 requires more resources as the funding does not exceed 44 percent of the needs.
Progress in donors' allocations and expenditures
Regarding developments in donors ' allocations and expenditures, the report confirmed that the total of donors' pledged have reached until March 2014 USD 8025, 4 million, a matter reflected donors' understanding of the importance of humanitarian and development support for making the political transfer a success and to help the government's efforts in restoring order, providing basic services, reducing unemployment and alleviating poverty.
According to the report, 94,7 percent of pledges have been allocated and the expended sums have reached 36, 4 percent. The government stressed in the report that under the limited local resources, huge urgent needs and the rest short period of the transitional, pledges and allocations have to be speed up.
The report indicates that there are six foundations of twining between priorities of the public budget and the transitional development investment program; providing work opportunities, good governance, the rule of law and human rights, activating partnership between public and private sectors, providing basic services to people and enhancing partnership with civil society organizations.
The joint framework binds the government to provide a package of reforms and policies in every pervious fields and committee donors to provide financial and technical support and allocating their pledges for priorities of the transitional program's projects for stability and development 2012-2014 within three years.
Progress in implementing the short list of reforms with priority
According to the report, the government and donors agreed during the technical meeting for following up the donors meeting's outcomes held on June 19, 2013 on choosing short list of priorities included in the joint framework and completing allocating donors' pledges.
The report reviewed nine priorities to be implemented; a twining plan to be presented to donors, implementing fingerprint and photo system to get rid of unexcited employees and of double jobs in the army and civil service, approving a partnership document with CSOs, transparency reports on minerals industries, appointing the news members of the Supreme National Authority for Combating Corruption, power reform plans, reform programs with International Monetary Fund, increasing donors' funds to human condition and reconstruction and Yemen's join to Deauville Partnership with Arab Countries in Transition.
Establishing and activating the Executive Bureau for Accelerating Absorption of Donors ' Pledges
The report indicates that the government has carried out a number of measures in setting up executive structure for the bureau and defined its duties and the mechanisms of its work. The report revealed ongoing preparations for preparing the framework of development transfer in the light of the NDC's outcomes to deals with the current aspirations of the citizen. The report confirmed that the implementation of these outcomes needs additional financings.
Underway government plan
The report presented a practical vision on a government plan aiming at improving political and economic situations in the country. The plan includes implementation of executive matrix of NDC's outcomes and accelerating carrying out tenders and to implement the financed projects. The bureau will conduct its duties in accelerating with the absorption of pledges and supporting capabilities of concerned bodies to continue the implementation of reforms.
Pledges the government asks donors to fulfill
According to the report, the government demands from the donors to honor pledges in accelerating the allocations of their pledges to be spent on projects with priority and providing the government with plans on withdrawals from pledges and considering pledges made in New York and Riyadh new resources to be presented as grants not loans. The government urges 100 percent funding for the projects with exempting the government from participation in financing. It further demands that allocating pledges must be in accordance with the transitional program projects for stability and development 2012-2014 in addition to financing the fund of the families of the martyrs and injured people with USD 500 million and funding the plan providing youth with work opportunities with another 500 million.