YEMEN: World Bank gives praise but calls for more reform

[ This report does not necessarily reflect the views of the United Nations]

SANA, 24 Feb 2005 (IRIN) - World Bank President James D. Wolfensohn has praised the Yemeni government for acknowledging and facing its problems but insisted that the country could only expect further support if the bank's current portfolio of projects performed well and if further policy reforms were implemented.

"I think the clarity of the government's analysis is commendable and there is nothing that we can recommend that the government is not aware of," Wolfensohn said last week at the end of a visit to the country.

But, in remarks to a meeting of representatives from civil society groups, he stressed: "Yemen is your country and it is up to all Yemenis to lead the change. All the World Bank can do is help you achieve your goals."

Mustapha Rouis, World Bank country manager in Yemen, told IRIN said that the bank appreciated that "Yemen is different from many other countries which don't even admit their problems."

Rouis explained that Wolfensohn's starting point was to commend the president, Ali Abdullah Saleh, for his efforts and achievements in tightening security, maintaining political stability, improving education and moving towards democracy. He also praised the work of the Social Fund for Development and the Public Works Project.

However, he emphasised that ongoing issues have major implications in the medium and long term for Yemen's development.

In particular, as Rouis explained to IRIN, the World Bank delegation addressed the "real challenges" that Yemen is facing: high population growth, low literacy and school enrolment rates - especially among women and girls - water scarcity, the rapid depletion of oil reserves on which the country is heavily dependent, corruption, high unemployment and the lack of macroeconomic stability and an unfavourable investment climate. "Time is not on the side of Yemen," Rouis stressed.

Rouis told IRIN that the government "responded quite positively" to Wolfensohn's criticisms and suggestions, and that it "wants to continue the partnership".

The World Bank has been supporting Yemen's efforts to fight poverty since 1971. To date, the bank has approved a total of 136 projects and supplemental credits, totalling over US $2.4 billion, of which $1.7 billion (71 percent) have been disbursed.

Yemen has one of the largest World Bank portfolios in the Middle East and North Africa. There are 19 projects currently active, with a further six under preparation in the areas of health, education, water resource management, agriculture,infrastructure and public-sector management.

Moreover, as Yemen is one of the poorest countries in the world ($510 income per capita), all the projects are funded by the International Development Association (IDA) - an arm of the World Bank Group - which gives financial assistance on concessional terms, interest-free for 40 years.

However, there is criticism of the World Bank among the Yemeni public, press and political opposition, especially over the contentious issue of government subsidies, which the International Monetary Fund (IMF) demands are lifted. There has been much hostility on the street and in parliament to the government's move to remove oil subsidies, which would result in a rise in the price of petrol and diesel of up to 50 and 100 percent respectively.

The World Bank delegation encouraged the government to proceed with the plan, but demanded that it ensure that there were enough safeguards in place to protect the poor from rising fuel prices. Economic reform angers the public, who believe that World Bank policies aggravate the plight of the poor.

An article in the Yemen Times (17 February) stated that "According to opinions of citizens, all the efforts that have been exerted for alleviating the impact of economic reforms, under support of the World Bank, have not succeeded until now in achieving the goals aspired for them, along with the
increase of poverty rates in Yemen..."

But, as Rouis explained, subsidies cost the government $800 million which could be invested elsewhere, for example in water. "The choice is the government of Yemen's," he said.

[ENDS]