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Ye-money crisis

Ye-money crisis

Sana’a needs urgent assistance to overcome its economic problems. Despite international donors failing to deliver on previous promises, there is some hope for the future.

April 12, 2010 4:34 by

Only about 42 percent of the population enjoys reliable access to the national grid, and power cuts are common. The failure to build new generation capacity is more a typical result of inefficient government machinery than lack of feedstock – major new power plants at Marib and Mabar have been on the drawing board for years. But the cost to the government of importing diesel and then of subsidizing diesel and electricity for its citizens places a hefty burden on public finances.

The I.M.F., predictably, urged the government to phase out fuel subsidies in its January report, while targeting assistance to the poorest sections of society. However, the cost would still be substantial given that about 45 percent of the population survives on less than $2 a day according to U.N. figures, while political instability – involving the Al-Houthi rebels and Al-Qaeda supporters and also a secession movement in the south – rules out giving market forces free rein.

While critical of donors for failing to make good on previous promises, Sana’a is also demonstrating awareness of its own part in stymieing development projects through a toxic combination of politicization of the allocation process, corruption, and bureaucratic logjams.

According to the local Yemen Observer newspaper, Sharaf Abdullah briefed the cabinet in early February on the London conference attendees’ complaints in this regard, noting that to accelerate the project delivery process, his ministry would only play a facilitating role in contact between donors and the ministries responsible for the development schemes – rather than acting as the centralized authority through which all such projects are required to pass.

“The reasons for the slow pace [of allocation of funds to projects and their enactment] stem from the weakness of local resources, the lack of research, and disagreements between the donors and the state on how the projects should be accomplished,” he was quoted as telling his government colleagues. “We are working on overcoming this situation and finding an efficient administration that will complete the projects for 2010-2011.”

That willingness to change coupled with international financial largesse offers some hope amid Yemen’s otherwise bleak political and economic outlook.

Trends magazine

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