Huge decline in Yemeni imports
Recent statistics reveal an alarming fall in import traffic to Yemen of various commodities and products, since peaceful protests demanding the fall of the regime broke out. The imports usually constitute 90 per cent of Yemen’s needs.
The Yemen Chamber of Commerce and Industry said last week that in the first half of the current year, imports declined by 80 per cent compared to the same period in 2010. The decline includes essential goods, foodstuffs, juices, oils, baby milk, construction and textile products, clothing, electronic goods, cement, steel, timber, furniture and car parts and accessories.
Voices fromYemen’s economic quarters expressed concern, especially regarding strategic commodities, the depletion of which will lead to famine if the country slides into a civil war. The same group believes that a million workers would lose their jobs in the construction sector, let alone the loss of customs and tax revenues that provide the bulk of the state treasuries finances. This could in turn make the government unable to meet its monthly obligation to employees, and its development projects.
The Yemeni Centre for Media and Economic Studies had previously noted that available strategic commodities, lead by wheat and flour, can only meet the country’s needs for six months, putting Yemen in a serious dilemma in the wake of the import decline, according to the centre’s director Mustafa Nasr. He believes that the scarcity of basic commodities will raise prices to record levels most families will not be able to afford, and create social turmoil especially if Yemen fails to reach a political solution to the current impasse.
The effects of the price rises are evident in the inflated price of a 50KG bag of flour, rocketing to 5,800 Riyals ($27.12), whilst a bag of sugar has reached 14000 Riyals ($65.48). Mr Nasr believes that the import decline will cast a dark shadow over state tax and customs revenues as traders are refusing to pay tax fees since suspending work.
Muhammad Jibran, Professor of Accountancy at Sana’a University, said that tax revenues during the first half of 2011 fell, with income tax dropping by 60 billion Riyals ($272 million). He expects the customs and tax deficit to reach 200 billion Riyals ($935 million) in next year’s budget due to a decline in imports, falling company profits, hundreds of factories suspending operations, and the paralysis of trade and banking activity.
The Customs Department revealed last Wednesday that total state revenue from customs fees between January and June fell 13% to 75.8 billion Riyals ($354 million) from 87.6 billion Riyals ($406 million) in the same period of 2010.
Muhammad Salah, Vice President of the Sana’a Chamber of Commerce, warned of continued import declines, and affirmed that market activity has been significantly affected by turmoil that wrought unprecedented damage on the economy not seen since the 26 September revolution of 1962. (Source: www.yallafinance.com)