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Economy
Sunday, 17-September-2006
Mahyoub al-Kamali - Electors have expressed their annoyance concerning the propaganda escapades repeated these days by candidates of political parties for the presidential and local councils elections, especially of their allegations that the economic reforms, which he General People Congress’ has led successfully, did not produce fruitful outcomes with regard the economic and social levels.

In statements to almotamar.net electors have pointed out that some of the political parties’ fallacies and candidates demonstrate that those aim only to jumble the developmental and productive march led by the GPC throughout the past years. According to these electors the Yemeni people will not believe those superstitious allegations mentioned by some candidates and without mentionable proofs. The obvious fact is that results of the reforms made by the GPC’s successive governments, particularly since 1995, are known and their figures are clear. After the realization of the millions dream in 1990 the government embarked on implementation of the economic reforms to treat destructive structural failures especially those resulting from the 1994 summer war. Then there was the horrible decline in the average of economic growth and the gross domestic product that registered negative growth in 1994 amounting to 2.3% under speeding up population growth following the return of the expatriates and emergence of the big gap between the two rates. Consequently, the productive capability of the Yemeni economy found itself unable to meet the total demand
Specialists in economy tell almotamar.net this gap between the production structure and the demand structure has widened and that was represented by the increase of overall demand that was over the capacity of the local actual production. The increase in overall demand reached 174 per cent of the domestic product of 1994, which explains the amount of contradiction between production and consumption and can be used as indicator the inflationary gap.
Those specialists add that interests of servicing debt have accumulated until they reached $4.4 billion by the end of 1994, out of the total external indebtedness the new state had inherited from the then two divided parts amounting to $ 10 billion. Yemen was about to slip into waves of increasing inflation that reached at 71.4% against 3.3% in 1991 at time the Yemeni riyal had registered a drop against the dollar, from 18 riyals in 1990 to 165 riyals in 1994 and the individual per capita share of the gross domestic product dropped from 650 dollars in 1990 to 280 dollars in he end of 1994. Added to that were the disorders in the balances of trade and the balance of payments whose deficit reached at 13.2% while the central bank was not in possession of reserves except of $ 357 million. Economic experts say out of this it is clear the volume of the economic reforms success, which are dependent on domestic expertise and resources. They say the most outstanding aspects o improvement in economic balances is the big retreat in the deficit of the public budget, from 17.1% in 1994 to 6.7% I the product of 1998, to 1.2% in 1999 until this deficit changed to surplus amounted 2.5% in 2001 and 3% in 2005.
The external reserves of the central bank rose from $ 430 million in 1994 to $ 569 million in 2001, reaching around $ 4.2 billion at the end of 2002 to cover the country’s imports for about 18 months and to reach at $ 5.5 billion in 2005 and to exceed that with a big percentage in the current year of 2006.
Hence was the actual implementation of the public budget of the state in the beginning of 2005 for the months January to June when an amount of YR 44 billion was appropriated as subsidiary to oil products of benzene, diesel, cooking gas and kerosene throughout the year 2005. According to experts it has been found that the big rise in world prices has created a reality different from all expectations. An example of that is the diesel which is sold to citizen for 17 riyals per a liter, including all costs of transport and storing, the cost of importing a one liter has risen to 92 riyals according to world prices, meanwhile the demand increased by high proportion during the past year to reach at one million liters in the period January-June of 2002 liters and that led to increase in financial spending on subsidy for the months January-June of 2005 to more than YR 173 billion. This means that the total subsidy for a full year can amount to YR 275 billion, exceeding by that all estimates that have been adopted in the budget

A group of measures and policies had been adopted to face those changes and to tackle the deficit in the public budget of 2005 and that is through reducing the volume of subsidy set for oil products by modifying prices of those goods.
As measures making up for the impacts that may result from raising prices of oil products the government had taken a number of measures such as reducing customs tariff on all commodities and requirements according to the new tariff that was approved by the parliament and issued under a decree by the president of the republic. The tariff included reduction of customs duties to 5% instead of customs group of duties that amounted between 25, 15 and 10% according to previous law of tariff as well as reducing the tax on sales. The government had also successfully started the gradual implementation of the law of salaries and wages in line with requirements of that law and that included increments for all state employees I the civil service and the armed forces whereby there was increase of the minimum limit of the salaries in addition to improving salaries of pensioners, both military and civilians and setting renewable allotments for investment and development spending to finance programs and activities of the Social Fund for Development and the project of public works.
The government had confirmed its Endeavour to implement a national program for building more than 3000 km of asphalted roads as part of the program of rural roads and a concentration in this regard on short roads linking the center of production and marketing with the aim of giving help to farmers in the effort of reducing the costs of their production and productive requirements and subsequently to decrease the burden expected from increasing prices of oil products and also to facilitate reaching different sites of social, and economic services centers. The aim also was to direct investment to expansion of electricity networks in more than 14 provinces in harmony with decisions taken by the Yemeni cabinet in addition to continuation in the support offered to electricity and water and sewage establishments, a matter that reduces the burden of raising prices of those services as a result of raising prices of oil products. Then there was the beginning in building gas pipeline from Safer in Marib to Maabar in the governorate of Thamar then to be extended to the governorates of Aden and Huddeidah guaranteeing the implementation of new projects for power generation in those places in the light of the vision of the strategy of for development of 2000-2005.
To alleviate the impact of raising prices of diesel he government exerted efforts to support irrigation networks, cotton prices, fishing boats and professional industries through subsidy of irrigation networks by 50 percent of their value, increasing prices of cotton by 20 riyals per one kilogram, reduction the price of traditional fishing boats by 50 percent of their price and support for small and house professions by 50 percent.
The ministry of finance was also instructed to draw and implement a program for rationalizing government spending in all areas, decreasing the percentage of diplomatic representation expenses abroad. There had been also reduction in expenses of conferences, participations, forums and foreign visits and canceling buying of cars and furniture and a halt in building administrative building, sending all their expenses to development and exemption of loans interests given farmers with small farms.
Nevertheless all those measures remain, in the opinion of the population, weak in the face of the wave of prices the markets were to witness as a result of trade chaos, weakness of mechanisms of monitoring prices, heralding negative reflections on the life of the citizens.
The Yemeni street has received the new price policies with much resentment because as the people say did not take into consideration the low level of their purchasing power and because they put in mind world prices of oil products. Hence the electors those election campaigns of some candidates have no evidence they can depend on for what they allege as the cause in failure of the process of economic reforms that have achieved obvious progress and gains reflected positively on the life of the citizens.
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