The International Monetary Fund on Thursday, March 8, urged Yemen to press ahead with privatization and reforms to its tax and bank supervision systems in order to lessen dependence on oil and improve living standards.
IMF executive directors, according to a summary of their recent assessment of Yemen, nonetheless hailed a marked improvement in the country's economy in 1999-2000, which they attributed to increased oil revenue and efforts by authorities to curb spending.
Economic growth in Yemen, based on preliminary estimates, increased from 3.8 percent in 1999 to 6.5 percent last year and is projected to be 2.4 percent in 2001. Inflation was brought down from 11.5 percent in 1998 to eight percent in 1999 before going back up to 10.9 percent in 2000. The consumer price index is predicted to expand by nine percent in 2001.
"The pickup in inflation in 2000, although partly attributable to drought conditions, was ... a source of concern," observed Fund directors, who said they were likewise "disappointed" that the pace of structural reform had slowed since late 1999.
"Continued macroeconomic stability and sustained implementation of structural reforms will be key to the expansion of the non-oil sector and a lasting and broad-based improvement in living standards," the IMF said.
The directors pointed to the need for tax reforms to create a more investment-friendly environment and called for a modern general sales tax. They also urged authorities to strengthen bank supervision and commercial codes and to implement a privatization law.
Also needed, according to the IMF, is "a leaner and better qualified civil service" to carry out structural reform and improve governance as well as spending restraint to finance an anti-poverty campaign. Directors in addition welcomed the government's intention to reduce energy-related subsidies as a share of gross domestic product and to tighten monetary policy in 2001. — (AFP, Washington)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)