Back Matter

Back Matter

Nada Choueiri, Klaus-Stefan Enders, Yuri Sobolev, Jan Walliser, and Sherwyn Williams
Published Date:
May 2002
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    Annex I Tourism Sector in Yemen: Problems and Prospects

    The tourism sector is widely seen as a potential source of growth in the non-oil sector. It is also widely recognized that a number of structural impediments— such as security concerns, first and foremost, and lack of infrastructure— constrain this potential and would need to be fundamentally addressed before the tourism industry could start making a major contribution to future economic growth and employment.

    Sector Potential

    Yemen has abundant tourism resources and potential for further growth and development. Yemen’s long history, reflected in its rich and unique culture, has left a wealth of significant archaeological sites and a unique vernacular architecture. Yemen has a mixture of scenery—ranging from desert through verdant valleys to mountain ranges—some 2,000 kilometers of coastline, fringing the Red Sea and the Gulf of Aden, and more than hundred islands. Finally, after centuries of isolation from the rest of the world, Yemen remains one of the last unknown destinations.

    In addition to the traditional tourism potential of its existing historic and scenic attractions, Yemen has significant opportunities for the development of other forms of tourism that are still largely unknown there, but which possess increasing market potential. These include trekking and mountain hiking, mountain biking, beach resort tourism, scuba diving, and eco-tourism, both terrestrial and marine.

    Size and Trends

    In general, since unification in 1990, international tourism in Yemen has been on an upward, trend, with visitor arrivals growing on average by about 5 percent a year (Table 17 and Figure 24). The tourism sector suffered major setbacks in 1991, after the Gulf crisis erupted; in 1994, the year of the civil war in Yemen; and in 1999. after a fatal kidnapping incident in December 1998.

    Table 17.Visitor Arrivals and Tourism Revenues
    Visitor arrivals, thousands51.827.372.269.839.961.474.580.587.657.8
    Revenue, US$ million40.021.046.954.
    Source: General Tourism Authority.

    Figure 24.Visitor Arrivals

    (In thousands)

    Source: Data provided by the Yemeni authorities.

    Yemen’s principal tourism source market is Western Europe (Table 18), in particular, Germany, France, Italy, and Britain, which to a large extent reflects the contacts established by the existing tour operators. The peak tourist season in Yemen is between October and March. International tourism is mainly concentrated in the governorates of Sana’a, Hadhra-mout, Al-Jouf, Al-Hodeidah, Marib, and Shabwa.

    Table 18.Average Tourism Statistics Since Unification
    Duration of
    per Stay,
    US dollars
    (Of which: By Region)
    Middle East17.45.4
    The Americas6.76.4
    Source: General Tourism Authority.

    In 1998, the tourism sector provided jobs, either directly or indirectly, to an estimated 23,000 workers, including those in the hotel industry and related sectors. As tourism extends to remote regions, it helps provide employment opportunities and increases incomes among the local population. Total foreign exchange revenues from tourism are still relatively small—at about 3 percent of total exports of goods and services, or 18 percent or non-oil exports in recent years—but have been growing on average by 8 percent a year.

    The Yemeni government believes that developing tourism will help enhance long-term economic growth and improve the living standards of the Yemeni people, as well as protect and preserve Yemen’s cultural heritage and natural environment.

    Structural Impediments

    Concerns over peace and security, and inadequate infrastructure, are the two largest immediate obstacles to the successful development of the tourism industry in Yemen, while the danger of losing the historic and cultural heritage and environmental degradation are longer-term problems.

    Security Concerns

    At present, the image of Yemen in the Western world is relatively poor and, prompted by continuous security-related incidents, the country is often characterized in the Western media as “kidnapping and bombing prone.”93

    Although Yemen was unified in 1990, civil unrest lasted and a 70-day civil war erupted in 1994. There are areas, especially in the North, which are still not under the full control of the central government. Reportedly, there are large numbers of Firearms in the country, almost four per head.94 Illicit weapons, including assault rifles, are openly carried. Politically motivated violence persists and security violations occasionally occur in rural areas.95 Tribal disputes, kidnappings, and shootouts between sheikhs’ armed entourages and government security forces are frequent, including in major cities and public places such as Sana’a International Airport.

    More than 100 kidnappings have occurred throughout Yemen since 1991, mainly conducted by armed tribesmen with specific grievances against the government.96 These kidnappings are normally resolved peacefully, but tribesmen have held some foreigners for extended periods, and the December 1998 incident—when four tourists were executed by a group of Islamic militants—gave Yemen front page international news coverage and dealt a severe blow to the nascent tourism industry.

    Since then, many countries, including the United States, the United Kingdom, and Japan, have advised their nationals against traveling to Yemen;97 Germany has reduced the number of accredited Yemeni tourist agencies to two; and KLM Airlines has suspended its service to Yemen.98

    Inadequate Infrastructure

    Addressing security concerns is necessary, but not enough for the successful development of the tourism sector in Yemen. The lack of adequate infrastructure—such as hotels, roads, catering, and airport services— is another major factor constraining the growth of the tourism sector.

    Only a third of roads in Yemen are paved. Poor roads and lack of easy access to tourist attractions entail long and uncomfortable journeys by four-wheel drive vehicles, which means that visits to places of interest have to be of relatively short duration.

    Existing hotel stock is heavily concentrated in the urban areas of Sana’a, Aden, Hadhramout, and Taiz, with more than 50 percent of first class rooms located in Sana’a. Despite a significant increase in hotel construction since unification, the number of hotel rooms suitable for international tourists who prefer to stay in high-grade properties has remained unchanged and is currently only about 1,100, or less than 15 percent of the total room stock.99 Consequently, tour operators have reported problems getting enough rooms of a suitable standard during the high season and have often had to reject big tour group reservations because of accommodation and transportation constraints.100

    The development of tourism is also constrained by the absence of basic services—such as eating and toilet facilities—and a shortage of potable water both at places of interest and at possible stopover points. Furthermore, there are no tourist information or interpretation centers outside Sana’a, while those available in Sana’a are not up to international standards, lacking appropriately trained or licensed tour guides.

    The situation is compounded by the shortage of trained and experienced local personnel and the absence of facilities providing professional training in the services sector. As a result, expatriates often have to be hired, especially in the hotel industry, thus further hindering the development of a local tourism sector.

    Finally, airport facilities have limited baggage and passenger handling capacity, partly reflecting Yemenia’s monopoly in this area, and could become congested if more than one aircraft is being served.

    Threat to Historic Heritage and Natural Environment

    At present, regulations to prevent the destruction of buildings of historic and cultural significance or protect the natural environment are limited and poorly enforced. As a result, there is a real threat to the historic heritage of Yemen, the very feature that constitutes the principal tourist attraction. According to anecdotal evidence, some 30 percent of “physical” heritage in the countryside has been lost in the past 10 years to unregulated commercial development, and parts of the coastline with significant beach resort potential are being lost to industrial development.101 Furthermore, the potential for eco-tourism, especially in the coastal areas, is being destroyed as various species—such as sea turtles—are driven to extinction because of poor enforcement of seasonal hunting and fishing restrictions.

    Policy Implications

    Given the undoubted potential of tourism in Yemen, the foregoing discussion suggests that the following are critical to the successful development of the tourism sector in Yemen:

    • Guaranteeing of security and maintaining a stable political and economic environment as preconditions for investment, both domestic and foreign, in the tourism sector, given the long-term, and hence high-risk, nature of such investment;

    • Investing in essential infrastructure and tourism-related services and facilities;

    • Providing training and licensing for both public and private sector tourism personnel to ensure that tourists receive a standard of service consistent with internationally accepted norms; and

    • Protecting and conserving the historic and cultural heritage and natural environment of the country.

    The formation of a public sector institutional structure, with well-defined functional responsibilities that would readily facilitate planning, development, marketing, and regulation, is critical to the attainment of policy objectives for the tourism sector in Yemen. This would require structural changes and training initiatives in order to make the public sector more effective in carrying out its statutory functions, and would include collaboration with the private sector.

    Government Efforts to Date

    After the kidnapping incident in December 1998, the government stepped up its effort to address the security problem and shore up the tourism industry. Special courts were set up to try kidnappers, and the death penalty was introduced for the offence.102 Weapons were banned in the capital, and a Special Forces unit was formed in November 1999 to combat terrorism.

    A new Tourism Law was issued in August 1999, and three new government entities were established—the Tourism Promotion Board, the High Council on Tourism, and the Environmental Council—in addition to the existing government structures in charge of tourism affairs, such as the Ministry of Tourism and Culture and the General Tourism Authority.103

    The Tourism Promotion Board was set up under the umbrella of the Ministry of Tourism and Culture and consists of representatives of the government, the private sector, and the media. It is charged with improving the image of Yemen in the Western media as well as increasing the general awareness abroad and at home of tourism in Yemen. It is chaired by the Minister of Tourism and holds weekly meetings to discuss the sector’s promotion and development strategy, hut has no decision-making authority. In addition, the Board has undertaken to study the experience of Egypt in limiting the fall-out from terrorism on the tourism industry.

    The High Council on Tourism is chaired by the Prime Minister and comprises seven other ministers, including the Ministers of Tourism, Information, Industry, Planning, Interior, and Defense. It meets to discuss key policy, investment, and security issues in the area of tourism and has decision-making powers.

    The authorities, led in their efforts by the General Tourism Authority, have recently been actively seeking technical assistance and external Financing for project implementation, including updating the Master Plan for Tourism Development in Yemen which was sponsored in 1991 by the European Community.

    Annex II Summary of the Tax System as of End-June 2000
    Summary of the Tax System as of End-June 2000
    TaxNature of TaxExemptions and DeductionsRates
    1. Taxes on business income
    1.1 Domestic corporationsLevied on net profits. Assessment base encompasses most forms of income, including interest, dividends, and foreign incomeDeductions: Operating costs; depreciation allowance; charitable contributions up to 5 percent of net in come; and Zakat.

    Exemptions: Income of cooperatives, and agricultural and humanitarian societies, provided trade is limited to members; and income from agriculture, livestock, poultry, fishing, and beekeeping, subject to regulations. Corporations may be granted an exemption if they qualify under the Investment Law (IL); this entails a five-year exemption, but Council of Ministers may grant an additional five years
    35 percent flat rate Penalties are levied for late payment
    1.2 Foreign corporationsSame as aboveSame as above35 percent flat rate
    1.3 ProprietorshipsSame as aboveDeductions: Same as above Exemption: YR1s 36,000Personal tax rates, 10 percent-35 percent
    2. Taxes on personal income
    2.1 Tax on wages and salariesLevied on total wage income (wages, salaries, bonuses, etc.,) including gratuities in cash or kind.

    Monthly withholding by the employer from wages of both residents and nonresidents and paid to tax authorities during the first 10 days of the following month. Companies with eight or more workers must keep tax records for their employees
    Deductions: Pension contributions, and work-related costs

    Exemptions: Monthly exemption: YR1s 3,000. Exemption not granted for nonresidents

    Fully exempted: diplomats: UN experts; pension and severance payments; wages paid to Yemeni agricultural and fishing workers: domestic servants; and income of day laborers
    Personal tax rates with a ceiling of 20 percent.
    2.2 Tax on professional incomeLevied on noncommercial and nonindustrial income.Deductions: Costs deducted according to specified listPersonal tax rates, 10 percent 35 percent
    3. Social security and retirement contributions
    3.1 Civil service and public enterprise employeesPaid to General Authority for Insurance and Pensions (GAIP)12 percent with equal contributions from employees and Government; Government also pays 1 percent for accident insurance.
    3.2 Police employeesPaid to separate pension fund12 percent with equal contributions from employees and Government
    3.3 Defense employeesPaid to separate pension fund12 percent with equal contributions from employees and Government
    3.4 Private sector employeesPaid to separate pension fund6 percent employee, 9 percent employer
    4. Taxes on property
    4.1 Real estate income taxLevied on all net income from leased buildings and landExemptions: Government; religious organizations; local councils; diplomatic housing; and hospitalsOne month’s rent (8.33 percent)
    4.2 Real estate sales taxLevied on sales proceeds From land and buildingsDeductions: None allowed. Exemptions: Transfers through inheritance; donations to religious or charitable organizations; religious organizations; and agricultural land3 percent of sales value
    5. Taxes on goods and services
    5.1 General excise taxesHarmonized taxes are levied on certain domestic and imported goods. The tax applies to the import costs (before the tariff) or at the domestic manufacturer level. For mineral water and soft drinks, tax applies to retail price paid by consumer5, 7, 11, 15 percent, 25 percent applies to certain specified transportation vehicles and luxury items
    5.2 Selected excise taxesItems taxable at manufacture level
    5.2.2 TobaccoLevied on domestically produced and domestically trademarked or foreign trademarked cigarettes; imported tobacco, and tobacco productsFor domestically produced cigarettes: 80 percent on domestically trade marked and 65 percent on foreign trademarked; 80 percent on imported cigarettes; 60 percent for cigars; 25 percent for imported tobacco
    5.2.3 Taxes on petroleum productsLevied on retail sales price
    Diesel oil:2
    Liquid gas:0.5 per cylinder
    5.3 Qat taxLevied on assessed market value25 percent
    6. Customs tariffApplied to all imports not specifically exemptedExemptions may be provided to corporations that qualify under the ILFour-band structure with rates of 5, 10, 15, and 30 percent, A single exemption of 70 percent applied to cigarettes and other tobacco products
    7. Other taxes
    7.1 Motor vehicle taxesLevied on all motorized vehicles operating in Yemen with gasoline or diesel powered engines: levied on purchases of fuel (domestic or imported)Exemptions: Government vehicles, diplomatic and embassy cars, and emergency vehicles.YR1s 0.25 per liter of gasoline: YR1s 0.15 per litre of diesel
    7.3 Counselor feesFor Yemeni visasAccording to a specific schedule
    7.4 Passport feeFee varies with the type of passport
    7.5 Compulsory military service feeLevied on Yemenis for exemption from or postponement of compulsory national military serviceYr1s 86,000 for exemption

      Alier, Max, and MartinKaufman,Nonrenewable Resources: A Case for Persistent Fiscal Surpluses,IMF Working Paper 99/44 (Washington: International Monetary Fund).

      Arab Oil and Gas Directory, 1999 (Beirut: Arab Petroleum Research Center).

      Backus and Crucini,2000, “Oil Prices and the Terms of Trade,Journal of International Economics, Vol. 50, pp. 185213.

      Bassett, Sheila, AlejandroGarcia, and ClaireLiuksila,Fiscal-Policy Sustainability in Oil-Producing Countries,IMF Working Paper 94/137 (Washington: International Monetary Fund).

      Burrowes, Robert D.,1989, “Oil Strike and Leadership Struggle in South Yemen: 1986 and Beyond,Middle East Journal, Vol. 43, No. 3, pp. 437454.

      Cashin, Paul, HongLiang, and C. JohnMcDermott,How Persistent are Shocks to World Commodity Prices?IMF Working Paper 99/80 (Washington: International Monetary Fund).

      Chalk, Nigel,Fiscal Sustainability with Non-Renewable Resources,IMF Working Paper 98/26 (Washington: International Monetary Fund).

      Colton, Nora Ann,1993, “Homeward Bound: Yemeni Return Migration,International Migration Review, Vol. 27 (Winter).

      Conge, Patrick, and GuemOkruhlik,1997, “National Autonomy, Labor Migration and Political Crisis: Yemen and Saudi Arabia,Middle East Journal, Vol. 51, No. 4, pp. 554565.

      Dunbar, Charles,1992, “The Unification of Yemen,Middle East Journal, Vol. 46, No. 3, pp. 456—476.

      Easterly, William, and StanleyFischer,1990, “The Economics of the Government Budget Constraint,The World Bank Research Observer, Vol. 5, (July) No. 2, pp. 127142.

      Engel, Eduardo, and RodrigoValdes,2000, “Optimal Fiscal Strategy for Oil Exporting Countries: A User’s Manual,Paper prepared for the MED Seminar Series (unpublished; Washington: Middle Eastern Department, International Monetary Fund).

      Hashem, Mouna,1996, Goals for Social Integration and Realities of Social Exclusion in the Republic of Yemen, (Geneva: International Institute for Labour Studies).

      Household Budget Survey 1998, 1999, (Sana’a, Yemen: Central Statistical Office).

      International Bank for Reconstruction and Development, 1996, Poverty Assessment Report, March, (Washington).

      Kostiner, Joseph,1996, “Yemen—The Tortuous Quest for Unity, 1990–94,Royal Institute for International Affairs.

      Pindyck, Robert,1999, “The Long-Run Evolution of Energy Prices,Energy Journal, Vol. 20, No. 2, pp. 127.

      Tersman, Gunnar,Oil, National Wealth, and Current and Future Consumption Possibilities,IMF Working Paper 91/69 (Washington: International Monetary Fund).

      United Nations, Development Program, 1999a, Poverty Policy Framework for Yemen, Strategic paper prepared byMohammedAl-Saqour, (ed)April (Sana’a).

      United Nations, Development Program, 1999b, Human Development Report (New York: Oxford University Press).

      Ward, Christopher,2000, “Qat in YemenWorld Bank, unpublished.

    Statistical Appendix
    Table A.1.Social and Demographic Indicators, 1995 and 1997
    Sociodemographic indicators
    GNP per capita (in U.S. dollars)2602702,070
    GNP per capita (PPP. current international dollar)7307204,630
    Total population (in millions)15.316.1280
    Population growth rate (in percent)
    Total fertility rate6.76.43.6
    Age dependency ratio (dependents to working-age population)
    Urban population (in percent)33.634.458.4
    Labor participation rate (in percent of population aged 14–64)69.367.057.2
    Female labor participation rate (in percent of total population)27.827.926.5
    Life expectancy at birth (in years)3535967
    infant mortality rate (per 1,000 live births)31009849
    Under five mortality rate (per 1,000 live births)14513763
    Maternal mortality rate (per 100,000 live births)1,471205
    Immunized: DPT, under 12 months (in percent of age group)535790
    Child malnutrition, under 5 years (in percent of age group)302914
    Access to safe water (percent of population)3985
    Access to sanitation (percent of population)1962
    Adult literacy rate404262
    Sources: Central Statistics Organization. Statistical Year Book: and IBRD, World Development Indicators database.

    Algeria, Bahrafn, Djibouti, Egypt Iran, Iraq, Jordan, Lebanon, Libya, Malta, Morocco, Oman, Saudi Arabia, Syria, and Tunisia.

    Data for the nearest year to 1997.

    Second column data are for 1998.

    Table A.2.Selected Economic and Financial Indicators, 1994–99
    (Change in percent)
    Production and prices
    Nominal GDP at market prices28.467.143.721.50.424.3
    Real GDP at market prices−
    Real non-oil GDP−
    Real oil GDP43.720.
    Consumer price index (annual average)71.362.540.04.611.58.0
    Crude export oil price
    (weighted average, U.S. dollar per barrel)15.416.920.318.511.618.7
    (In percent of GDP)
    Government finance
    Total revenue and grants12.819.535.932.826.431.8
    Oil revenue3.79.325.122.113.819.8
    Non-oil revenue8.99.810.510.112.211.1
    Total expenditure29.025.639.834.732.732.1
    Overall balance (commitment basis)−16.3−16.3−16.3−16.3−16.3−16.3
    Overall balance including grants (cash basis)−15.7−5.20.6−1.8−7.9−0.4
    (12-month change in percent of initial broad money)
    Monetary data
    Broad money34.720.48.610.711.713.8
    Credit to nongovernment sector69.028.0−29.446.654.215.0
    Benchmark deposit interest rate (percent p.a.)6.520.
    Velocity (Non-oil GDP/M2)
    (In millions of US. dollars)
    External sector
    Exports f.o.b.1,8241,9372,2632,2741,5012,466
    Of which
    Crude oil1,6151,7351,9761,9451,2292,131
    Imports, f.o.b.1,522−1,948−2,294−2,407−2,228−2,440
    Services (net)−475−411−370−470−398−489
    Private remittances and transfers (net)1,1171,1041,1881,2561,2541,314
    Capital account (net)−641−876−39734−15411
    Overall balance−779−38−625116−463320
    Central bank own gross foreign reserves3575259371,1528531,351
    In months of imports12.
    Current account, including grants (in percent of GDP)−3.72.9
    Debt service ratios2
    Obligation basis46.842.131.912.617.010.5
    Official external debt10,87611,01711,1355,3595,3735,490
    (In percent of GDP)167170173818580
    Terms of trade (1996=100)85.585.3100.0100.769.5114.1
    Exchange rate (free market, eop) (YR1s/US$)101.0127.1126.9130.5141.7159.7
    Real effective exchange rate (1996=100)376.2100.0109.7119.5107.1
    Sources: Yemeni authorities and IMF staff estimates.

    Gross reserves minus commercial bank foreign exchange deposits held with the central bank. Imports are for the current year and exclude oil and gas sector imports.

    Public and publicly guaranteed debt, including central bank foreign liabilities. In percent of exports of goods and services.

    INS. based on free market rate.

    Table A.3.Sectoral Origin of Gross Domestic Product at Current Prices, 1994–99
    (In millions of Yemeni rials)
    Agriculture and forestry63,34290,330108,526124,750158,397167,441
    Mining and quarrying8581,6402,4492,5062,5242,705
    Oil and gas117,79069,116191,273244,915137,758263,309
    Oil refining2,4388,64523,20726,60027,76930,433
    Electricity, gas, and water2,0343,1115,3346,7187,9128,401
    Wholesale and retail trade30,07749,63458,91872,87787,91099,807
    Restaurants and hotels2,0653,3754,0475,1016,1526,983
    Transportation, storage, and communications44,62564,61883,056104,337113,219127,814
    Financial institutions13,86818,82816,85617,43731,46733,602
    Real estate and business services7,83112,14916,84021,00725,04528,827
    Community, social, and personal services6,93311,00012,78414,53616,72818,625
    Government services48,60965,77773,96382,17596,479121,982
    Private, nonprofit services196140270304342384
    Import duties7,44016,80425,99729,03429,65330,994
    Less: Imputed bank services charges−11,364−16,644−14,886−15,703−20,688−22,056
    Total GDP292,279488,509702,112852,897855,9451,063,557
    Of which:
    Non-oil GDP274,489419,393510,839607,982718,187800,247
    (In percent of GDP)
    Agriculture and forestry21.716.515.514.618.515.7
    Fishing2. 91.7
    Mining and quarrying0.
    Oil and gas6.
    Oil refining0.
    Electricity, gas, and water0.
    Wholesale and retail trade10.310.28.48.510.39.4
    Restaurants and hotels0.
    Transportation, storage, and communications15.313.211.812.213.212.0
    Financial institutions4.
    Real estate and business services2.
    Community, social, and personal services2.
    Government services16.613.510.59.611.311.5
    Non-oil GDP93.985.972.871.383.975.2
    Source: Central Statistic Organization.

    The large increases in oil and gas GDP in 1993 and 1996 are in large part due to exchange rate effects. The official exchange rate increased from YRls 12US$ in 1994 to YRls 40.5/US$ in 1995 and YRls 114 /US$ in 1996.

    Table A.4.Use of Resources at Current Prices, 1994–99(In million of Yemeni rials)
    Public sector161,97678,033105,161134,623146,820179,257
    Private sector178,129341,263493,937592,935680,413758,855
    Gross investment59,785101,057146,155202,029180,976197,758
    Gross fixed capital formation56,77399,025143,207198,543180,976197,758
    Public sector7,49815,04846,52957,81552,58459,496
    Private sector49,27583,97796,678140,728128,392138,262
    Of which:
    Oil companies14,67815,30718,59820,10616,85023,246
    Change in stocks3,0122,0322,9483,48600
    Domestic absorption299,890520,352745,253929,5871,008,2091,135,870
    Net exports of goods and nonfactor services−7,611−31,843−43,141−76,690−152,264−72,318
    GDP at market prices292,279488,509702,112852,897855,9451,063,557
    Net factor income2−25,994−37,682−74,414−81,535−48,813−101,968
    Gross national product266,285450,827627,698771,362807,132961,589
    Net current transfers2,350,01983,278129,212162,350170,340204,675
    Gross national disposable income316,304534,105756,909933,712977,4731,166,264
    Gross domestic saving52,17469,213103,014125,33928,712125,445
    Gross national savings from disposable income76,199114,810157,812206,154150,239228,152
    Public sector national savings439,706−14,69618,83441,391−1,53756,877
    Private sector national savings4115,905129,506138,977164,763151,776171,275
    (In percent of GDP)
    Public sector21.
    Private sector60.969.970.469.579.571.4
    Gross investment20.520.720.823.721.118.6
    Gross fixed capital formation19.420.320.423.321.118.6
    Public sector2.
    Private sector16.917.213.816.515.013.0
    Change in stocks1.
    Domestic absorption102.6106.5106.1109.0117.8106.8
    Net exports of goods and nonfactor services−2.6−6.5−6.1−9.0−17.8−6.8
    Net factor income−8.9−7.7−10.6−9.6−5.7−9.6
    Gross national product91.192.389.490.494.390.4
    Net current transfers17.117.018.419.019.919.2
    Gross national disposable income108.2109.3107.8109.5114.2109.7
    Gross domestic saving17.914.214.714.73.411.8
    Gross national savings from disposable income26.123.522.524.217.621.5
    Public sector national savings4−13.6−−0.25.3
    Private sector national savings439.726.519.819.317.716.1
    Sources: Yemeni authorities; and IMF staff estimates

    Uses data from the fiscal accounts.

    Uses balance of payments data.

    Includes workers’ remittances.

    The large increases in public sector savings and declines in private sector savings in 1995–96 are attributable largely to the effects of exchange rate depreciations and world prices increases.

    Table A.5.Sectoral Origin of Gross Domestic Product at Constant Prices, 1994–99
    (in millions of 1990 Yemeni rials)
    Agriculture and forestry33,36535,68836,15839,07544,49744,375
    Mining and quarrying312345396403364368
    Oil and gas20,15624,19727,46929,54230,32632,217
    Oil refining2,3222,4702,3762,3852,2332,266
    Electricity, gas, and water1,5521,7631,9792,0182,0662,215
    Wholesale and retail trade8,4529,76410,56311,26312,18512,929
    Restaurants and hotels408467506563609646
    Transportation, storage, and communications14,37913,97312,01613,99613,62314,373
    Financial institutions3,6163,2892,4952,4693,9963,988
    Real estate and business services4,1174,4044,5984,9535,2965,697
    Community, social, and personal services2,3642,3952,5732,7712,8602,976
    Government services14,13512,24910,58811,15711,74813,893
    Private, nonprofit services576569736776
    Import duties4,8314,6815,4505,3874,3784,237
    Less: imputed bank services charges−3,303−3,100−2,028−2,088−3,496−3,490
    Total GDP at market prices.121,273130,912134,754145,652153,342159,160
    Of which:
    Non-oil GDP101,117106,715107,285116,110123,016126,943
    (Changes in percent)
    Agriculture and forestry−−0.3
    Mining and quarrying−3.110.614.81.8−9.71.1
    Oil and gas43.720.
    Oil refining−9.56.4−3.80.4−6.41.5
    Electricity, gas, and water−10.313.612.
    Wholesale and retail trade−
    Restaurants and hotels−13.614.58.411.38.26.1
    Transportation, storage, and communications−19.2−2.8−14.016.5−2.75.5
    Financial institutions8.6−9.0−24.1−1.061.8−0.2
    Real estate and business services6.
    Community, social, and personal services4.
    Government services−18.4−13.3−
    Non-oil GDP−
    Sources: Central Statistics Organization; and Central Bank of Yemen.
    Table A.6.Distribution of Employment (Age 15 Years and Over) by Economic Activity 1
    ActivityThousandPercent of
    Total Employed
    ThousandPercent of
    Total Employed
    ThousandPercent of
    Total Employed
    Private sector
    Agriculture, forestry, and fishing1,66752.31,92849.21,99648.5
    Mining and quarrying100.3130.3130.3
    Electricity, gas, and water140.4210.5210.5
    Trade, restaurants, and hotels33210.441510.644010.7
    Transport, storage, and communication1504.71965.02105.1
    Finance, insurance, and real estate351.1471.2491.2
    Social and community services2247.03659.341210.0
    Public administration41012.940510.33899.5
    Total employment3,188100.03,919100.04,119100.0
    Source: Ministry of Planning.

    Data for 1994 are based on the general population census of that year; 1998 and 1999 data based on Ministry of Planning estimates.

    Table A.7.Distribution of Employment (Age 10 Years and Over) by Sectors in Urban and Rural Areas, 1998(In percent unless otherwise specified)
    UrbanRuralTotal Employment
    Private sector59.539.757.084.497.788.079 092.182.3
    Total (thousand)669.499.3768.72,453.7931.03,384.73,123.11,030.34,153.4
    Source: General Statistics Organization, 1998 Household Expenditure Survey.
    Table A.8.Household Income and Expenditure, 1998(Yemeni Rials, unless otherwise specified)
    Average household income36,98826,65429,035
    Average household member income5,0243,7634,096
    Average household expenditure on food20,72719,81820,026
    Average household expenditure on nonfood17,6249,56211,421
    Ratio of household income to expenditure (in percent)96.490.792.3
    Memorandum items:
    Average household size (persons)
    Illiteracy rate (in percent)27.4756.5749.47
    Median age of population (in years)15.914.214.6
    Source: Central Statistics Organization, 1998 Household Expenditure Survey
    Table A.9.Distribution of Population (10 Years and Over) by Education Level, Region, and Gender, 1994, 1998(in percent of total)
    Read and write33.424.536.916.126.838.230.344.420.032.2
    Combined level2.
    Pre-secondary diploma0.
    Post-high school diploma0.
    University and above3.
    Total (thousand)2,4177,0404,8534,6049,4572,5818,0095,3035,28710,590
    Sources: Central Statistics Organization; General Population Census, 1994; and Household Expenditure Survey 1998.
    Table A.10.Crude Oil Summary, 1994–99(In thousands of barrels per day)
    A Total net output1334342344360367389
    East Shabwa1617
    B. Companies’ exports154155137137177158
    East Shabwa1313
    1. Companies’ net output share107110117118100112
    East Shabwa12
    2. Cost recovery8885605610775
    East Shabwa1112
    3. Income tax414140373028
    East Shabwa00
    C. Government exports135123129150112146
    D. Government sates to refineries456478737785
    Average oil export price (US$/bbl)151720181219
    Export revenue (million US$)1,6151,7351,9761,9451,2292,131
    Source: Ministry of Oil and Mineral Resources.

    Net of miscellaneous oil field uses.

    Including YICOM share.

    Table A.11.Oil Exploration Blocks Awarded in 1996–99
    Company LicensedYear AwardedSelected Terms of Contract
    S1Vintage/TransGlobe1997150 km2 of 3-d seismic data to be acquired and three wells to be drilled over the first 2½-year phase, at estimated minimum cost US$11 million.
    S2Preussag1997Block had just been relinquished by consortium of Oxy/Amerada Hess/Mol.
    9Cal Valley Petroleum1997US$8 million to be spent during the initial three-year exploration period.
    31Oil and Gas Mine Co.1997US$20 million to be spent on the two blocks (31 and 41) including the acquisition of 800 km of 2-d seismic data and the drilling of two exploration wells
    41Oil and Gas Mine Co.1997
    49MOL1997Minimum expenditure of US$8 million, including 300 km of seismic acquisition and two exploration wells over three years.
    50Kerr-McGee/Canadian Oxy/YGCOG1997Current stakes are 47.5 percent, 47.5 percent, and 5 percent, respectively.
    51Kerr-McGee/Canadian Oxy/YGCOG1997Current stakes are 47.5 percent, 47.5 percent, and 5 percent, respectively.
    53Dove/YGCOG1997Stakes: 75 percent and 25 percent respectively.
    11CanadianOxy1998At least US$ 11.5 million to be spent over seven years.
    12CanadianOxy1998At least US$ 11.5 million to be spent over seven years.
    36CanadianOxy1998At least US$ 11.5 million to be spent over seven years.
    43First Calgary Petroleum/ Ocean Energy1998Expenditure set at US$7.5 million for each of the two 2½-year periods
    48MOL1998A minimum of US$ 15 million to be spent over three years; work program to include acquisition of 500 km of 2-d seismic data and the drilling of two exploration wells.
    54CanadianOxy1998At least US$ 11.5 million to be spent over seven years.
    15Oil Search/Muhammad Al-Otaiba Group1999A minimum US$10 million to be invested in the first phase, two exploration wells to be drilled, and geological studies to be conducted.
    2Agip/Sonatrach1999The Algerian Sonatrach has a 40 percent interest in the block
    20Adair International Oil and Gas Inc./PIE1999Seismic operations to have begun in 2000; two exploratory wells and a minimum of US$ 16.8 million to be spent in two exploratory periods.
    Sources: Arab Oil Directory; and Ministry of Oil and Mineral resources.
    Table A.12.Domestic Consumption of Petroleum Products, 1994–99
    (Millions of liters)
    Total petroleum products3,6533,9274,0334,1554,0433,911
    Aviation fuel93102939399111
    Fuel oil589808909909938898
    (Percent change)
    Total petroleum products−−2.7−3.3
    Aviation fuel−11.08.7−8.0−
    Fuel oil−27.637.−4.3
    Source: Ministry of Finance.
    Table A.13.Output of Industrial Products, 1994–991
    Electricity (million kwh)2,1592,3692,4572,4822,5572,633
    Extractive industries
    Salt (thousand tons)11871135136147149
    Quarried stone (thousand cubic meters)2,8232,3972,4372,4972,547
    Gypsum (thousand tons)991009799102103
    Food, beverage, and tobacco industries
    Bread (thousand tons)7178159162170179
    Biscuits and confectioneries (thousand tons)696864654344
    Ghee and edible oils (thousand tons)9997106108108109
    Soft drinks (million liters)675134354546
    Mineral water (thousand cubic meters)1148176775657
    Vimto drink (thousand of liters)1,6022,9632,7182,491
    Ice (thousand tons)365458596161
    Milk and products (million liters)686647485455
    Ice cream (tons)1442,0541,6321,6651,7151,749
    Cigarettes (million units)5,4236,5406,7406,8006,0405,859
    Textile industries
    Underwear (thousand pieces)360278287293
    Woolen pullover (thousand pieces)0280
    Weaving (million meters)75555
    Ginning (thousand tons)1122
    Metallic industries
    Household utensils (tons)7476042,4341,7401,7751,793
    Barrels (thousands)433723730
    Doors and windows (thousand square meters)604690703
    Metallic scrubbers (tons)1231105253
    Stationary engines (thousands)283132
    Metal suitcases (thousands)5010
    Beds (thousands)1
    Nonmetallic industries
    Cement (thousand tons)8981,1001,0701,0381,2071,231
    Red bricks (thousands)14,03314,31914,60514,89715,120
    Cement bricks (thousands)81,11885,31587,02189,00090,780
    Tiles (millions)93481837372
    Marble (thousand square meters)117583838688
    Chemical industries
    Plastic footwear (thousand pairs)597777
    Foam rubber (tons)1,6421,9181,5561,572
    Household utensils (tons)9854,7303,8303,873
    Buckets (tons)1,3871,5321,8041,840
    Water cubes (tons)8135,9173,7213,759
    Plastic sheets (tons)4,7865,67310,15110,354
    Plastic tubes (tons)4,3077,6407,2647,409
    Paint (thousand liters)7,7529,8828,3318,2477,137
    Soap (thousand tons)3032242320
    Perfume (thousand ounces)1,049900901919
    Oxygen gas (thousand cubic meters)1101170
    Heat insulation (tons)1213
    Fuel gas (thousand tons)233313298325
    Paper and printing
    Paper tissues (tons)4551,0821,9171,9361,9481,967
    School books (tons)6,8076,9444,0147,0637,204
    Cartons (thousand tons)121211111314
    Source: Central Statistics Organization.

    Data for 1998–99 are provisional, as compilation of the underlying data is not yet completed.

    Table A.14.Production, Area, and Yield of Major Crops, 1994–991(Production in thousand metric tons; area in thousand hectares; and yield in tons per hectare)
    Cereals (total)
    Sorghum and millet
    Grapes, dates, and other fruits
    Production360.7402.2391.3469.4554 5588.0
    Other fruits
    Sources: Ministry of Agriculture; and Central Statistics Organization.

    Data for 1999 are preliminary.

    Table A.15.Noncrop Primary Production, 1994–99(In thousands of metric tons)
    Total meat and milk220.4241.3253.0261.1274.9280.4
    Eggs (millions)351.0358.0367.0495.0600.0612.0
    Total fish catch81.985.9103.7115.6127.6137.3
    Surface water fish80.384.394.393.5104.9111.2
    Deep water fish0.10.16.712.412.114.5
    Other aquatic catch1.
    Sources: Central Statistics Organization and Ministry of Agriculture.
    Table A.16.Consumer Price Index for Urban Areas, 1994–991
    (December 1994 = 100)
    Overall index100.0157.2200.0214.1239.6264.0
    (Changes in percent)
    Overall indexn.a.
    Sources: Central Statistics Organization; and IMF staff estimates.

    The CPI is based on consumption shares from the 1992 Household Budget Survey and consists of a weighted average of the price Indices for Sana’a and Aden. The numbers are end-of-period.

    Table A.17.Domestic Retail Prices for Petroleum Products and Electricity, 1995–2000
    (In Yemeni rials per liter, unless otherwise indicated)
    Fuel oil11.
    Fuel oil22.
    Aviation fuel35.012.513.513.513.513.525.035.0
    LPG (12.5 kg cylinder)50.0120.0165.0165.0165.0200.0200.0200.0
    Electricity (per kWh)
    (In U.S. dollars per liter, unless otherwise indicated)
    Fuel oil10.
    Fuel oil20.
    Aviation fuel0.
    LPG (12.5 kg cylinder)0.411.581.
    Electricity (per kWh)
    Memorandum item;
    Exchange rate (YR1s/US$)4120.576.0129.0130.2132.5137.0160.5161.0
    Sources: Ministry of Oil and Mineral Resources: and IMF staff estimates.

    For electricity plants.

    For cement plants.

    In May 1999, aviation fuel prices were increased above world market levels and were to be maintained at levels exceeding international prices, which explains the increase implemented in April 2000.

    End-period free market exchange rate for the relevant month.

    Table A.18.Summary of Central Government Finances, 1994–99
    (In millions of rials)
    Total revenue and grants37,53895,296251,899279,459225,959338,253
    Total revenue36,68193,676250,029274,659222,620328,394
    Oil and gas revenue10,78645,621176,192188,415117,772210,598
    Crude oil exports9,19431,55998,824128,99973,002134,854
    Domestic oil and gas1,59214,06277,36859,41644,77075,744
    NonOil revenue25,89548,05573,83786,243104,848117,796
    Grants (cash)8561,6201,8704,8003,3399,859
    Total expenditure and net lending84,741125,040279,594295,882280,080340,872
    Current expenditure77,243109,992233,065238,067227,496281,376
    Civilian wages and salaries28,43535,75447,66452,39064,28778,341
    Materials and services5,2787,50716,24124,87225,63232,527
    Defense (wage and non wage)28,26332,91239,17051,33452,24761,548
    Interest obligations8,4717,28723,51020,01831,56243,570
    Domestic (net)6,5841,4599,6157,88222,45932,260
    Explicit subsidies016,49791,24465,50425,70226,116
    Wheat and flour011,46551,96438,59225,7024,329
    Petroleum products05,03237,30024,751021,787
    Electricity: transfer to PEC001,9802,16100
    Current transfers6,7967,44611,28013,54118,68028,278
    Of which:
    Public enterprises1,9061,7812,4704,0254,9706,455
    Civil service pension fund003002,2302,736
    Social welfare fund005001,7004,3885,946
    Development operation and
    maintenance fund0002,0002,0002,300
    Development expenditure7,49815,04846,52957,81552,58459,496
    Ministry of Planning5,52610,38137,67544,44336,813
    Capital transfers1,9724,6678,85411,87215,135
    Public works0001,500636
    Net lending000000
    Overall balance (commitment)−47,203−29,744−27,695−16,424−54,121−2,619
    Rescheduled and pending interest
    Domestic arrears0022,341−8,573−17,705−3,000
    Overall balance (cash)−45,764−25,2884,367−15,712−67,822−4,302
    External (net)416−7352,8512,74010,08924,668
    Bilateral and multilateral loans (net)−8,222−28,111−59,446−8,597−8,6544,211
    Amortization obligations−9,208−30,262−75,236−28,212−30,634−31,850
    Amortization arrears8,63827,37662,297−698−5530
    Rescheduled amortization00019,89719,29720,458
    Payment of late interest and short-term
    arrears (Paris Club and other)000−2,23700
    Domestic (net)45,87826,078−7,68812,90757,776−24,228
    Central bank46,94922,412−17,371−28,76426,464−50,616
    Commercial banks−1,0712,5026,62427,6061,8163,727
    (In percent of GDP)
    Overall balance (commitment)−17.4−6.6−3.9−1.9−6.3−0.2
    Overall balance (cash)−16.9−5.60.6−1.8−7.9−0.4
    Primary cash balance2−14.3−5.02.6−0.6−4.73.9
    Public sector savings−15.0−−0.64.4
    Total revenue and grants13.921.135.932.826.431.8
    Total revenue13.520.735.632.226.030.9
    Oil and gas revenue4.
    Crude oil exports3.
    Domestic oil and gas0.
    Non-Oil revenue9.610.610.510.112.211.1
    Tax revenue7.
    Nontax revenue2.
    Total expenditure and net lending31.327.739.834.732.732.1
    Current expenditure28.524.433.227.926.626.5
    Civilian wages and salaries10.
    Materials and services1.
    Of which:
    Wages and salaries8.
    Interest obligations3.
    Domestic (net)
    Explicit subsidies0.03.713.
    Wheat and flour0.
    Current transfers2.
    Public enterprises0.
    Civil service pension fund0.
    Social welfare fund0.
    Development expenditure2.
    Ministry of Planning2.
    Capital transfers0.
    Public works0.
    Net lending0.
    External (net)0.2−
    Domestic (net)16.95.8−−2.3
    Central bank17.35.0−2.5−3.43.1−4.8
    Commercial banks−
    Sources: Ministry of Finance: Central Bank of Yemen; and IMF staff estimates.

    Allocations to the Agriculture and Roads Maintenance Funds, development operation and maintenance and other items.

    Overall balance, excluding interest obligations.

    Table A.19.Composition of Central Government Revenues, 1994–99
    (In millions of Yemeni rials)
    Total revenue36,68193,676250,029274,659222,620328,394
    Oil revenue10,78645,621176,192188,415117,772210,598
    Crude oil export receipts9,19431,55998,824128,99973,002134,854
    Domestic oil and gas revenues1,59214,06277,36859,41644,77075,744
    Of which:
    Payment for past excess cost recovery0016,290000
    Non-oil revenue25,89548,05573,83786,243104,848117,796
    Tax revenue20,26739,00658,83469,57078,85285,419
    Customs duties7,44016,80426,29425,81424,12125,703
    Taxes on goods and services4,3949,99615,18021,22624,97424,419
    Taxes on income3,7865,5538,76510,68513,09316,389
    Corporate profits tax3,1284,2625,8048,31813,15614,498
    Stamp taxes11,1011,8589731,177797
    Zakat equivalent on foreign companies00428548
    Real estate transfer tax418533460776757943
    Nontax revenue5,6289,05015,00316,67325,99632,377
    Profit transfers2,5145,4716,7728,71216,67719,376
    Commercial banks1091031382271253
    Aden refinery2006511,18025520010
    Non-oil nonfinancial public enterprises8034,3295,3147,8442,7124,064
    Post and telecommunications200300789574700
    Fees and charges1,2482,9784,4814,3496,695
    Foreign oil company exploration fees00252130169
    Vehicle fees00427443530596
    Consular fees00778382187210
    Delayed military service fee00230305453510
    Other nontax revenue1,8666003,7503,6122,624
    Fines and forfeitures231236350
    Asset sales115432,580814
    Foreign oil company signature bonuses3605001,211882
    (In percent of GDP)
    Total revenue13.520.735.632.226.030.9
    Oil revenue4.
    Crude oil exports3.
    Domestic oil and gas revenues0.
    Payment for past excess cost recovery0.
    Non-oil revenue9.610.610.510.112.211.1
    Tax revenue7.
    Customs duties2.
    Taxes on goods and services1.
    Taxes on income1.
    Corporate profits tax1.
    Nontax revenue2.
    Profit transfers0.
    Non-oil public enterprises0.
    Fees and charges0.
    Other nontax revenue0.
    Memorandum item
    GDP at market prices (in millions YRls)270,900451,530702,112852,897855,9451,063,557
    Sources: Ministry of Finance; Central Bank of Yemen; and IMF staff estimates.

    Includes Zakat for 1993–95.

    For l994–96, includes fees not attributed to entries specified above.

    Table A.20.Composition of Central Government Expenditure, 1994–99
    (In millions of Yemeni rials)
    Total expenditure and net lending84,741125,040279,594295,882280,080340,872
    Current expenditures77,243109,992233,065238,067227,496281,376
    Civilian wages and salaries28,43535,75447,66452,39064,28778,341
    Materials and services5,2787,50716,24124,87225,63232,527
    Agricultural and road maintenance funds07291,8702,3812,7321,856
    Interest obligations8,4717,28723,51020,01831,56243,570
    Domestic (net)6,5841,4599,6157,88222,45932,260
    Of which:
    Parliamentary and judiciary expenses01,8602,0862,9684,0235,945
    Accounting and audit authority000474538746
    Election committee0002,58593150
    Explicit subsidies016,49791,24465,50425,70226,116
    Wheat and flour011,46551,96438,59225,7024,329
    Petroleum products05,03237,30024,751021,787
    Consumer subsidy053032,29519,067021,787
    Unsettled claims04,5025,0055,68400
    Electricity; transfer to PEC001,9802,16100
    Current transfers6,7967,44611,28013,54118,68028,278
    Public enterprises1,9061,7812,4704,0254,9706,455
    Social welfare1,9542,7802,8214,0216,709
    Of which:
    Social welfare fund005001,7004,3885,946
    Regular pension contributions52773702,2302,736
    Pension supplements00000
    Transfers to civil service pension fund0030000
    Medical grants133320302650604
    Social and sports activities1,0261,2701,3001,078
    Development operation and
    maintenance fund0002,0002,0002,300
    Development expenditure7,49815,04846,52957,81552,58459,496
    Ministry of Planning5,52610,38137,67544,44336,813
    Capital transfers1,9724,6678,85411,87215,135
    Public works10001,500636
    Net lending000000
    Memorandum item: GDP292,279488,509702,112852,897855,9451,063,557
    (In percent of GDP)
    Total expenditure and net lending29.025.639.834.732.732.1
    Current expenditure26.422.533.227.926.626.5
    Civilian wages and salaries9.
    Materials and services1.
    Of which:
    Interest obligations2.
    Explicit subsidies0.03.413.
    Wheat and flour0.
    Petroleum products0.
    Current transfers2.
    Development expenditure2.
    Ministry of Planning1. 3
    Sources: Ministry of Finance; Central Bank of Yemen: and IMF staff estimates.

    Related to the IDA public works project.

    Table A.21.Current and Capital Transfers to Public Enterprises, 1994–98(In millions of Yemeni rials)
    Current transfers1,9061,7802,9003,9844,967
    Broadcasting and Television Corporation3133721,0171,2601,599
    Mineral Exploration Organization7978153163191
    Oil Exploration Corporation96107145237253
    Organization for Agricultural Research140148202233318
    Rural Development Organization525172102140
    Al-Thawra Hospital237331430883781
    Touhama Development Organization9096157157198
    Yemen News Agency525768107145
    Other agricultural and industrial enterprises162180109155333
    Financial support for troubled enterprises000407312
    Capital transfers1,9725,08411,95015,135
    Broadcasting and Television Corporation28936486338
    Civil Aviation and Meteorology Authority6084323622
    National Water and Sewerage Corporation19801,4063,009
    Postal Service Organization75266460
    Public Authority for Rural Electricity and Water36903,1302,587
    Public Electricity Corporation2563,9355,5217,201
    Rural Areas Development Organization930150115
    Al-Thawra Hospital2610380139
    Yemen Company for Oil Investment in Jannah00400400
    Aden Free Zone Authority0091107
    Source: Ministry of Finance.

    The data for 1996 predate the data presented in Tables 13 and 15. No detailed data are available for the updated aggregate figures In Tables 13 and 15.

    Table A.22.Monetary Survey, 1994–99(In millions of Yemeni rials; end of period)
    Broad money206,190248,265269,551298,388333,350379,294
    Demand deposits28,70335,02136,22139,48040,25940,273
    Foreign currency deposits45,63555,59963,87576,41095,992111,668
    Foreign assets (net)22,95338,899103,344145,177112,532200,029
    Central bank (net)1,62419,78487,51493,63754,789136,286
    Commercial banks (net)21,32919,11515,83051,54057,74363,743
    Domestic assets (net)183,237209,366166,208153,212220,818179,266
    Claims on government (net)178,447205,003187,310164,156219,768173,468
    Central bank (net)195,274222,309204,901158,304185,160135,181
    Budget financing181,197209,342199,057171,234196,702153,962
    Counterpart to YBRD claims on CBY17,87722,50022,4634,6305,0225,659
    Commercial banks (net)−2,3331696,79334,39836,21539,942
    Total budget financing (net) excluding YBRD175,064199,977189,230188,072216,352169,464
    Pension fund term deposits at CBY14,49417,47524,38328,5461,6071,655
    Claims on nongovernment sector27,24634,87524,60536,07155,63063,970
    Private sector17,61923,86522,35834,38054,20562,426
    Foreign currency3,9355,0255,1469,74913,99319,478
    Public enterprises9,43310,8262,0661,5031,120895
    Foreign currency6,9848,77414519600
    Mixed enterprises194185181188305649
    Valuation adjustment−25,374−17,207−11,856−14,900−14,399−10,430
    Other items (net)2,917−13,305−33,851−32,116−40,181−47,742
    Capital and reserves−3,429−5,201−7,269−11,362−23,729−28,762
    Other (net)6,346−8,104−26,582−20,754−16,452−18,980
    Memorandum items:
    Rial broad money160,555192,666205,676221,978237,358267,627
    (In millions of US. dollars)
    Total net foreign currency position197.4388.8578.1663.3356.6832.6
    Central bank−28.2244.9535.2585.0269.6740.0
    Of which:
    Net foreign assets135.2395.4689.6717.7386.7853.3
    Foreign currency deposits−153.2−252.9−263.6−223.9−266.5−303.1
    Commercial banks225.7143.943.078.387.092.6
    Of which:
    Net foreign assets211.2150.4124.7395.1407.5399.1
    Foreign currency deposits−437.3−395.0−390.1−491.8−600.7−625.3
    YBRD claims on Central Bank of Yemen177.0177.0177.035.535.435.4
    Official exchange rate (end-period)12.050.0126.9130.5141.7159.7
    Free market exchange rate (end-period)101.0127.1126.9130.5141.7159.7
    Source: Central Bank of Yemen.
    Table A.23.Factors Affecting Domestic Liquidity, 1994–99
    (Changes in end-year stocks, in millions of Yemeni rials)
    Broad money53,06842,07521,28628,83734,96245,944
    Demand deposits4,3686,3181,2003,25977914
    Foreign currency deposits13,2749,9658,27512,53519,58215,676
    Net foreign assets11,21215,94664,44541,833−32,64587,496
    Central bank (net)1,78518,16067,7306,123−38,84881,497
    Commercial banks (net)9,427−2,214−3,28535,7116,2036,000
    Net domestic assets41,85626,129−43,158−12,99667,606−41,552
    Claims on government (net)48,36126,555−17,693−23,15455,611−46,300
    Of which:
    Central bank (net)52,83527,035−17,408−46,59726,856−49,979
    Total budget financing (net)46,94922,412−17,371−28,76426,464−50,616
    Counterpart to Yemen Bank for
    Reconstruction and Development
    claims on the Central Bank of Yemen5,8864,623−37−17,833393637
    Commercial banks (net)−1,0712,5026,62427,6061,8163,727
    Claims on nongovernment sector11,1217,629−10,27111,46719,5598,340
    Private sector4,9666,246−1,50712,02219,8258,221
    Public enterprises6,1071,393−8,760−563−383−225
    Mixed enterprises48−9−58117344
    Valuation adjustments−19,5218,1675,351−3,04500
    Other items (net)1,896−16,222−20,5471,736−7,564−3,592
    Capital and reserves−832−1,772−2,068−4,0935013,969
    (Changes in percent of broad money)(Changes in percent)
    Broad money34.720.48.610.711.713.8
    Demand deposits2.
    Foreign currency deposits8.
    Net foreign assets7.37.726.015.5−10.926.2
    Central bank (net)1.28.827.32.3−13.024.4
    Commercial banks (net)6.2−1.1−1.313.22.11.8
    Net domestic assets27.3127−17.4−4.822.7−12.5
    Claims on government (net)31.612.9−7.1−8.618.6−13.9
    Of which:
    Total budget financing (net)30.710.9−7.0−10.78.9−15.2
    Claims on nongovernment sector7.33.7−
    Private sector3.23.0−
    Public enterprises4.00.7−3.5−0.2−0.1−0.1
    Mixed enterprises0.
    Valuation adjustments−−
    Other items (net)1.2−7.9−8.30.6−2.5−1.1
    Capital and reserves−0.5−0.9−0.8−l.50.21.2
    Memorandum items:
    Rial broad money33.
    Rial demand deposits17.922.
    Rial quasi-money19.836.971.713.53.35.2
    Claims on private sector39.235.4−6.353.857.715.2
    Foreign currency27.72489.543.539.2
    U.S. dollar equivalent1.52.684.332.123.5
    (Ratios to rial broad money)
    Rial demand deposits0.
    Rial quasi-money0.
    Source: Central Bank of Yemen
    Table A.24.Balance Sheet of the Central Bank, 1994–99
    (In Yemeni Rials)
    Foreign assets4,28831,107131,445160,249138,927237,687
    Gold, silver, and foreign currency2801,7676,3915,3595,9466,945
    Foreign exchange held abroad3,42526,586106,524132,240107,635192,319
    Foreign securities0012,4591513,43610,180
    SDR holdings5832,7536,07222,50021,91028,243
    IMF reserve position (IMF record)000000
    Claims on government199,074231,842221,520175,864201,724159,621
    Of which:
    Budget financing181,197209,342199,057171,234196,702153,962
    Counterpart to YBRD claims117,87722,50022,4634,6305,0225,659
    Claims on public enterprises57010501,108895
    Other assets2,37511,5829,84011,34417,34024,652
    Claims on commercial banks4094544900
    Fixed and other assets2,33511,4889,78611,29517,34024,652
    Assets = Liabilities205,794274,531362,815347,507359,099422,854
    Foreign liabilities2,66411,32343,93166,61384,138101,401
    Of which:
    Reserve money143,481163,963179,575154,837175,223211,621
    Currency outside banks111,006129,114120,477126,904139,668166,924
    Currency with banks1,9401,8841,9082,6522,6632,160
    Commercial banks deposits30,53532,96557,19025,28232,89242,538
    Foreign currency1924,81112,4759,69817,99321,974
    Government deposits3,8009,53316,62017,56016,56424,440
    Foreign currency1842,4566,6107,2718,90814,633
    Public enterprise deposits7,98522,23329,42132,79927,75422,556
    Demand deposits3,31312,0368,86910,6068,76910,624
    Time deposits3,2084,8066,1909,9488,117137
    Foreign currency deposits1,4645,39014,36312,24610,86811,795
    Social security fund deposits14,49417,47524,38328,5461,6071,655
    Public sector13,08115,75722,00826,298
    Private sector1,4121,7182,3762,248
    Other liabilities33,37050,00468,88647,15353,81361,181
    SDR allocation5002,1385,2355,0735,7236,300
    Claims of YBRD117,87722,50022,4634,6305,0225,659
    Exchange valuation account2,7374,25411,81412,27213,2319,194
    Capital and reserves600600600600600600
    Other liabilities11,65720,51228,77424,52229,23639,428
    (In millions of US. dollars)
    Memorandum items:
    Net foreign assets135395690718387853
    Foreign currency deposits153253264224267303
    Net foreign currency position−28245535585270740
    Central bank gross foreign assets3576221,0361,2289801,488
    Central bank own gross foreign assets3555849371,1548531,351
    Source: Central Bank of Yemen.

    Foreign currency claims originally equivalent to US$177 million valued at the He market exchange rate, reduced to US$35 in 1997.

    Table A.25.Balance Sheet of the Commercial Banks, 1994–991
    (In millions of Yemeni rials)
    Foreign assets49,15143,08842,45359,47264,85770,991
    Foreign currency5,2205,3162,5773,9143,8774,206
    Balances with banks abroad43,38736,86338,55454,32060,34266,726
    Claims on nonresidents1270000
    Foreign investments4179101,3221,23863859
    Deposits with central bank30,95942,17157,99525,40033,05141,470
    Foreign currency2212,18712,5369,80317,76821,558
    (in millions of U.S. dollars)0969975125135
    Claims on government3901,2956,96334,87336,2670
    Treasury bills8736,62234,54936,2670
    Credit to government390422342324039,972
    Claims on nongovernment sector27,18934,87524,59536,02100
    Credit to public enterprises9,37610,8262,0561,453120
    Foreign currency6,9848,77414519600
    Credit to private sector17,61923,86522,35834,38000
    Foreign currency3,9355,0255,1469,74954,20562,426
    Credit to mixed enterprises19418518118813,99319,478
    Other assets49,24454,83145,33833,070305649
    Interbranch accounts (net)1490015100
    YBRD claims on CBY217,87722,50022,4634,63020,70024,477
    Other assets331,21832,33122,87528,28902
    Foreign currency20,39121,3172,1433,97915,67718,815
    Assets = Liabilities158,873178,145179,252191,48700
    Of which:
    in foreign currency98,422112,96684,88687,83400
    Foreign liabilities27,82223,97326,6247,9327,114127,094
    Deposits of foreign banks1,2685681,0694401,2650
    Of which:
    in local currency20186647,248
    Nonresidents deposits2,4632,4212,7662,0411,265772
    Of which:
    in local currency1,2501,1111,6921,13142
    Borrowing from foreign banks24,09120,98422,7885,451950947
    Demand deposits25,39022,98527,35328,87531,4900
    Quasi-money deposits17,63923,72442,78945,64749,31329,649
    Time deposits8,77512,41524,38023,98524,9240
    Savings deposits7,6539,33314,74718,12220,70560,293
    Earmarked deposits1,2101,9773,6613,5403,68430,427
    Foreign currency deposits44,17150,20949,51264,16585,1244,185
    (in millions of U.S. dollars)4373953904916010
    Government deposits2,7231,12717147452625
    Foreign currency97339756178530
    Other liabilities41,12956,12732,80444,39500
    Credit from central bank424526230
    Foreign currency33004032
    Capital and reserves2,8294,6016,66910,76223,12932
    Interbranch accounts (net)01,3811,0260820
    Other liabilities15,62137,18925,06230,97914,5650
    Foreign currency3,90121,2254,9416,4765,03115,623
    Exchange valuation22,63712,953422,6281,1685,403
    Total liabilities158,873178,145179,252191,487173,093161,553
    Of which:
    in foreign currency75,63094,67579,43577,61793,63214,338
    (In millions of US. dollars)
    Memorandum items;
    Net foreign currency position2261444378870
    Net foreign assets38832730243144393
    Foreign currency deposits (net)163183259352356435
    (In percent of total assets)
    Foreign assets31.
    Treasury bills0.
    Other assets31.
    Source: Central Bank of Yemen.

    Foreign asset, liability, and currency components are evaluated at the free market exchange rate of all periods.

    foreign currency claims equivalent to US$177 million over 1993–96 and reduced to US$35 million in 1997.

    Also includes nonperforming loans.

    Table A.26.Interest Rates, 1994–991(In percent end-period rates)
    Central bank lending rates
    Public enterprises17.
    Commercial banks16.024.123.516.520.023.0
    Commercial bank lending rates
    Maximum rate17.0
    Rate range25–3225–3215–2117–2423–28
    Commercial bank (minimum/benchmark)
    Deposit rates2
    Savings deposits10.520.
    Three-month time deposits12.020.020.0
    Six-month time deposits13.021.021.0
    Nine-month time deposits14.021.521.5
    One-year time deposits15.022.022.0
    Specialized banks’ lending rates3
    Short term7.
    Medium and long term9–1110–127–117–11
    Treasury bill average interest rate on
    successful bids
    Source: Central Bank of Yemen.

    Prior to July 1995, a fixed interest rate structure applied to all loans and deposit rates. The mandated minimum deposit rates were not enforced and effective deposit rates were 3–5 percent. Interest rate reform in July 1995 freed interest rates, eliminated concessional loan rates, and enforced benchmark minimum commercial bank deposit rates.

    In May 1997, the benchmark system was narrowed to one minimum rate for savings accounts.

    As of June 1998, all specialized banks have adopted the interest rate structure applying to commercial banks.

    Table A.27.Distribution of Commercial Bank Credit to the Nongovernment Sector,1 1994–99(End of period)
    (in millions of Yemeni rials)
    Short-term loans and advances16,26431,24222,67633,05831,417.933,647.4
    Agriculture and fisheries35137135113038.6121.2
    Export financing1617243267.8167.2
    Import financing4,4054,9964,6346,5359,105.39,390.6
    Trade in manufactured goods1,8612,8817,0387,6368,767.44,711.1
    Medium- and long-term loans1,0853,4481,7382,7744,844.14,724.8
    (In percent of total)
    Short-term loans and advances949093926865
    Agriculture and fisheries211000
    Export financing10010
    Import financing251419182018
    Trade in manufactured goods1182921199
    Medium- and long-term loans61078119
    Source: Central Bank of Yemen.

    Prior to 1998, a different classification was adopted, which explains gaps in the data for the period 1994–97

    Investments refer to lending by Islamic banks on Islamic principles.

    Table A.28.Commercial and Specialized Banks as of December 31, 1999
    Date of
    (Millions of
    Yemeni rials)
    Commercial banks:
    Yemen Bank for Reconstruction and Development (YBRD)1962Sana’a1,000.0Government5137
    Yemeni private49
    National Bank of Yemen1969Aden1,915.0Government10031
    United Bank Ltd.1972Sana’a1,000.0Branch of United Bank (Pakistan)1002
    Arab Bank PLC.1972Sana’a1,043.0Branch of Arab Bank (Jordan)1006
    Banque Indosuez1975Sana’a1,304.5Branch of Banque Indosuez (France)1005
    Yemen Commercial Bank1993Sana’a1,145.0Yemeni Private1005
    Yemen-Kuwait Bank for Trade and Investment1979Sana’a774.5Yemeni private1001
    International Bank of Yemen1980Sana’a906.0Yemeni private755
    Saudi Arabian Banks25
    Rafidain Bank1982Sana’a60.0Branch of Rafidain Bank (Iraq)1001
    Islamic banks:
    Islamic Bank for Finance and Investment1995Sana’a925.0Yemeni private21002
    Altadamon Islamic Bank1996Sana’a1,500.0Yemeni private21008
    Saba Islamic Bank1997Sana’a1,159.0Yemeni private21003
    AlWatani1998Sana’a750.0Yemeni private1004
    Specialized banks:
    Industrial Bank of Yemen1976Sana’a96.5Government70
    Yemeni private30
    Housing Credit Bank1977Sana’a200.0Government70
    Yemeni private30
    Cooperative and Agricultural Credit1982Sana’a293.0Government8734
    Yemeni cooperatives13
    Source; Central Bank of Yemen.

    Including head office.

    With some foreign minority shareholders.

    Table A.29.Indicators of Banking System Financial Soundness, 1997–991(In percent)
    Portfolio quality:
    Problem loans/total loans55.246.158.5
    Problem loans/total assets11.510.213.0
    Provisions against problem loans/problem loans21.727.831.0
    Total capital and reserves/problem loans46.283.062.0
    Portfolio performance:
    Average return on assets1.00.91.0
    Average return on equity13.015.014.0
    Capital adequacy:
    Total capital and reserves/total assets5.38.58.1
    Risk-weighted capital adequacy ratio0.62.55.2
    Exposure to exchange rate risk:
    Total foreign currency assets (in billions of rials)88.4109.3127.4
    Total foreign currency liabilities (in billions of rials)78.297.8112.8
    Net exposure/total capital and reserves10065.377.7
    Foreign credits/foreign deposits15.216.019.0
    Estimated exposure to real estate market:
    Total real estate loans/total loans0.32.05.2
    Total construction loans/total loans0.31.93.3
    Source: Central Bank of Yemen.

    Data refer to the commercial banking system in aggregates, and exclude specialized banks.

    Table A.30.Balance of Payments, 1994–99
    (In millions of U.S. dollars)
    Trade balance302.1−11.0−30.8−132.6−726.824.5
    Exports, fob.1,824.01,937.22,262.82,274.01,501.12,464.4
    Crude oil1,615.41,735.01,976.21,944.91,228.72,131.2
    Government share753.1777.5958.41,012.2470.7993.0
    Oil companies’ share862.3957.51,017.7932.7758.01,138.2
    Oil products177.8133.4209.8199.2140.8193.7
    Non-oil exports130.868.876.8129.9131.5139.5
    Oil products, f.o.b.−207.9−172.0−176.5−165.3−116 9−174.3
    Oil sector capital goods, c.i.f.−172.8−113.7−95.9−84.5−66.0−70.8
    Other imports, f.o.b−1,141.2−1,662.5−2,021.1−2,156.7−2,044.9−2,194.8
    Services, net−474.6−411.1−369.7−469.9−397.5−488.8
    Transportation, net−52.5−46.9−50.0−93.4−96.7−92.6
    Freight and insurance, net−120.3−206.5−233.4−305.2−284.2−311.4
    Tourism, net18.549.954.969.779.041.6
    Oil processing fees, receipts5.
    Other services, net13.0−3.5−3.0−3.7−5.0−31.8
    Oil companies’ foreign expenditures,
    Government services, net−11.4−7.2−13.8−26.7−18.6−22.6
    Compensation of employees−53.4−47.9−47.7−29.7−31.0−27.0
    Investment income−525.2−451.2−633.9−600.9−328.2−627.7
    Current transfers1,117.01,103.91,188.41,255.61,253.51,314.1
    General government transfers, net71.340.060.289.459.190.9
    Cash grants0.00.027.537.120.239.0
    Workers’ remittances, net1,042.71,063.91,122.61,156.91,190.71,223.2
    Other transfers (oil signature bonus)
    Current account balance365.9182.7106.322.6−230.0195.1
    Capital account−641.0−876.3−397.134.4−206.6−74.1
    Medium- and long-term loans, net−684.6−694.1−520.7−66.5−63.727.0
    Pipeline, net−684.6−694.1−520.7−66.5−63.727.0
    Suppliers’ credits0.
    Amortization obligations−766.7−747.2−659.0−218.2−225.4−204.5
    Short-term oil trade credits, net1.3−32.5−63.763.570.7−119.4
    Oil sector direct investment, net15.8−217.7−60.1−138.5−266.7−318.8
    Oil sector loans−
    Wheat import financing, net28.068.0167.4−79.3−187.20.0
    Private capital, net0.00.080.0255.1240.2337.1
    Errors and omissions−503.7655.3−334.059.6−26.6198.8
    Overall balance−778.8−38.3−624.9116.5−463.1319.9
    Net reserves changes (increase -)−79.4−713.0−36.9−296.7317.1−458.5
    Commercial banks69.2−452.9257.3−269.7−12.98.3
    Debt relief0.00.093.46,048.1113.682.5
    Change in overdue obligations (increase +)1858.2751.3568.4−5,867.932.456.2
    (In percent of GDP)
    Current account5.−3.72.9
    Crude oil24.826.830.729.519.531.2
    Capital account−9.8−13.5−6.20.5−3.3−1.1
    Overall balance−12.0−0.6−9.71.8−7.44.7
    (In millions of U.S. dollars, unless otherwise indicated)
    Current account including grants (percent of GDP)−3.72.9
    Of which:
    Official grants (percent of GDP)
    Central bank own gross foreign reserves23575259371,1528531,351
    (Months of imports)
    Official external debt410,87611,01711,1355,3595,3735,490
    (In percent of GDP)167170173818580
    Debt service (percent of exports of goods and services)4
    Obligations basis474232131710
    Change in outstanding IMF credit
    (increase +)001211308574
    Source: Central Bank of Yemen.

    Includes debt to non-Paris Club creditors under discussion to ensure comparable treatment.

    Includes central bank SDR holdings, foreign exchange held abroad, foreign securities, gold, silver, and foreign currencies; excludes commercial bank required foreign exchange reserves with the central bank against their foreign currency deposits.

    Imports are c.i.f for current year and exclude imports of oil sector capital goods.

    Public and publicly guaranteed debt including central bank foreign liabilities. Debt and debt service reflect the 1996 and 1997 Paris Club rescheduling, including the SO percent upfront discount provided by the Russian Federation.

    Table A.31.Composition of Exports and Reexports, 1994–991
    (In millions of Yemeni rials)
    Crude oil219,40171,271224,140251,436166,953331,993
    Petroleum products29343,63723,80425,74819,13430,428
    Other exports and reexports1,2374,5229,65916,79817,86917,014
    Hides and skins1131636021,2021,137841
    Fruits and vegetables22128334674664709
    Metal ore27306317578430245
    Perfumes and cosmetics6083198378750225
    Total, f.o.b.21,57379,431257,603293,982203,956379,435
    (In millions of U.S. dollars)3
    Crude oil21,615.41,735.01,976.21,944.91,228.72,131.2
    Petroleum products277.8133.4209.8199.2140.8195.4
    Other exports and reexports103.0111.785.1130.3131.6109.2
    Hides and skins9.
    Fruits and vegetables1.
    Metal ore2.
    Perfumes and cosmetics5.
    Total, f.o.b.1,796.21,980.12,271.12,274.41,501.12,435.8
    Sources: Central Statistics Organization; Ministry of Oil and Mineral Resources.

    Customs data except for crude oil. includes oil companies’ share of crude oil exports.

    Data provided by Ministry of Oil and Mineral Resources and Aden Refinery. Excludes reexports from Aden Refinery under processing arrangements, and includes oil companies’ share of crude oil exports.

    Converted from Yemeni rials at the average customs exchange rate.

    Table A.32.Direction of Exports and Reexports, 1994–991,2(In percent of total)
    Arab countries19.411.97.33.711.03.9
    Saudi Arabia4.
    United Arab Emirates1.
    South Africa0.
    China, People’s Republic of2.523.320.630.624.928.8
    South Korea20.81.917.819.111.314.5
    Industrial countries33.313.722.313.118.35.5
    United Kingdom0.
    United States12.
    Other countries3.08.611.
    Of which:
    Bunkering (ships)
    Bunkering (aircraft)
    Not classified0.
    Total, f.o.b.100.0100.0100.0100.0100.0100.0
    Sources: Central Statistics Organization; Ministry of Oil and Mineral Resources; and IMF staff estimates.

    Customs data except for crude oil. Includes oil companies’ share of crude oil exports.

    Excludes reexports from Aden Refinery under processing arrangements.

    Table A.33.Composition of Imports, 1994–99 1,2(in millions of U.S. dollars)
    Food and live animals450.3542.8941.3802.0776.2555.5
    Meat and live animals70.948.839.548.880.069.1
    Live animals31.424.213.417.737.533.9
    Meat and meat products39.524.626.131.142.535.2
    Dairy products and eggs50.336.261.375.383.953.2
    Cereals and their products3198.5315.2648.7445.9414.5263.3
    Vegetables and fruits29.426.840.041.050.531.1
    Sugar and its products, and honey59.180.1111.9137.498.6105.7
    Coffee, tea, and spices20.720.519.118.318.213
    Beverages and tobacco32.732.433.235.843.636.4
    Raw materials41.443.845.551.748.633.6
    Wood and cork26.730.426.024.726.718.9
    Minerals, fuels, and lubricants3236.3121.3165.8223.4139.4113.6
    Animal and vegetable oils26.466.750.873.18355.2
    Manufactured goods, classified
    by materials296.3353.3298.8353.1374.9234.0
    Rubber manufactures28.932.932.538.333.521.6
    Wood and cork14.011.410.516.418.66.5
    Paper manufactures27.642.334.634.548.632.1
    Nonmetallic mineral
    Iron and steel96.7117.183.0107.0115.873.7
    Metal manufactures34.052.440.848.948.427.9
    Machinery and transport
    Road vehicles87.1101.8120.7103.0106.571.1
    Other transport equipment5.
    Miscellaneous manufactured
    Professional and scientific
    Other commodities0.
    Total imports, c.i.f.1,556.91,739.02,129.52,231.82,327.61,535.9
    Source: Central Statistics Organization.

    Customs data. Excludes oil company investment goods imports, The sharp fall recorded for total imports in 1999 reflects preliminary and incomplete data reports for the year.

    Converted from Yemeni rial data at the average customs exchange rate, except for mineral fuels and lubricants, which are converted at the official rate.

    Data for 1994–96 are Central Bank of Yemen estimates.

    Table A.34.Sources of Imports, 1994–991(in percent of total)
    Arab countries27.224.927.627.228.834.5
    Saudi Arabia9.
    United Arab Emirates9.910.87.78.5911.7
    China, People’s Republic of2.
    Hong Kong SAR0.
    South Korea1.
    Industrial countries44.528.045.146.947.143.1
    United Kingdom5.
    United States8.
    Other countries1.
    Czech Republic0.
    Russian Federation0.
    Total imports, c.i.f.100.0100.0100.0100.0100.0100.0
    Sources: Central Statistics Organization.

    Excludes oil company investment goods imports.

    Table A.35.Enterprises Privatized/Liquidated, 1997–99
    NamePrivatization MethodTimingRemarks
    Industrial Sector
    1. Al-Thawra metal products30-year leaseImplemented in 1997Lessee hires 35 of original staff and MOF continues to pay salaries/benefits of remaining workers.
    2. Agriculture and metal products30-year leaseImplemented in 1997, 1/1/1998Lessee hires all of the 96 effective original staff.
    3. Leather shoe factoryLand and building restituted; equipment sold and new land rented to purchaser for 30 yearsImplemented in 1997, effective 1/1/1998Purchaser hires 15 of original staff and MOF continues to pay salaries/benefits of remaining 78 employees.
    A. Leather productsSame as (3)Implemented in 1997Purchaser keeps five staff and MOF continues to pay salaries/benefits of remaining 73 employees.
    5. Martyrs’ garment factorySame as (3)Implemented in 1997, effective 1/1/1998Purchaser keeps 10 staff and MOF continues to pay salaries/benefits of remaining 98.
    6. Vegetable oil factoryEquipment sold and land leased for 30 yearsImplemented in 1998The three employees were retained by purchaser of equipment.
    7. Soap factoryEquipment sold but no deal concluded on leasing the siteSale of equipment done in 1997Technical Privatization Office will take over in handling the fate of the site
    8. The public bakeryEquipment sold and the building and land rented for other purposesSale of equipment finished in 1998, and land leasedOwner keeps 12 staff and MOF continues to pay salaries/benefits of remaining 75 employees.
    9. Women’s sewing cooperativeLiquidationCompleted in 1999
    Agricultural Sector
    10. Hammam Ali state farm (Dhamar government)Privatized by rentImplemented in 1999
    11 Dar Sa’ad poultry (Aden gov.)Privatized by rentImplemented in 1999
    12. Old Fowah poultry (Hadramout)Privatized by rentImplemented in 1999
    13. New Fowah poultry (Hadramout)Privatized by rentImplemented in 1999
    14. Agricultural machinery rental Station-Saiyoun Hadramout (government)Privatized by management buyout under new name. Saiyoun Company for Agricultural and Industrial MachineryImplemented in 1999This is the only enterprise that has been privatized through Technical Privatization Office.
    15. Al-Mashhad Farm (Hadramout)Not availableImplemented in 1999
    Transport Sector
    16. National Shipping Agency (Natship)Not availableImplemented in 1999Directly privatized by ministry. It was one of the two major activities (shipping) undertaken by the National Shipping Company.
    17. Stevedoring operationsNot availableImplemented in 1999Directly privatized by ministry. It was the second major activity (loading/ unloading cargoes) of the National Shipping Company.
    Supply and Trade Sector
    18. Consumption society for state, process public, and mixed sectors employeesLiquidationImplementation was still ongoing in 1999Might not have been completed by year-end.
    Source: The Yemeni authorities.
    Table A.36.Enterprises To Be Privatized/Liquidated
    NameStatus in ProcessRemarks
    Large Enterprises:
    1. Aden refineryShort-listed consultant started evaluation in mid-January 2000, completion of study was expected in July 2000Oil sector
    2. Airport ground handling servicesShort-lists of consultants approved; invitation letter to them in preparationTransport sector
    3. General corporation for land transportSame as aboveTransport sector
    4. General corporation for cement and marketing production (Sana’a)Same as aboveIndustrial sector
    5. Yemen drug company (Sana’a)Same as aboveIndustrial sector
    Small and Medium Enterprises: Industrial Sector
    6. The biscuit and candies factory (Aden)Short-list of consultants ready for HC approvalAs of February 1998, had been tendered three times: very low bids each time
    7. Automatic bakery (Aden)Same as aboveSame as above
    8. Dairy factory (Aden)Same as aboveSame as above
    9. Canada Dry factory (Aden)Same as above
    10. National tanning factory (Aden)Same as above
    11. Tomato paste factory (Lahaj)Same as aboveLabor force estimate in 1997: 118
    12. Textile and spinning factory (Aden)Same as above
    13. Textile and spinning factory (Sana’a)Negotiation with the Chinese government ongoing for capital share
    14. The National Company for Aluminum ManufacturingCabinet decree just issued for privatization
    15. The National Company for Sponge and Metal Furniture Manufacturing Ltd.Same as above
    Agricultural Sector
    16. Agricultural machinery rental station in Al-Dale (Lahaj government)Short-list ready for HC approval.Labor force estimate in 1997: 51
    17. Agricultural machinery rental station in jear (Abyan government)Same as aboveLabor force estimate in 1997: 111
    18. Agricultural machinery rental station in Behan (Shabwah government)Same as aboveLabor force estimate in 1997: 56
    19. Agricultural machinery rental station in Laboos (Lahaj government)Same as aboveLabor force estimate in 1997: 34
    20. Agricultural machinery rental station in Saber (Lahaj government)Same as aboveLabor force estimate in 1997: 91
    21. Agricultural machinery rental station in Loder (Abyan government)Same as above
    22. Agricultural machinery rental station in Mefah (Shabwah government)Same as above
    23. Agricultural machinery rental station in Nisab (Shabwah government)Same as above
    24. General corporation for fruit and vegetables marketing (Aden government)Same as above
    25. Date packing unit (Hadramout government)Short-list ready for HC approval
    26. Agricultural machinery rental station (Al Habilin, Lahaj government)Same as above
    27. General corporation for agricultural services (Sana’a)Same as above
    28. General corporation for poultries (Aden)Same as above
    Fisheries Sector
    29. Central unit for maintenance and services—subsidiary of the general corporation for fish services and marketing (Aden government)Short-list ready for HC approval
    30. Shograh fish canning factory (Abyan government)Same as aboveLabor force estimate in 1997: 147
    31. Ice factory in Midi (Hajjah government)Same as above
    32. Ice factory in Anwar (Abyan government)Same as above
    33. Ice factory in Bear Alt (Shabwah government)Same as above
    34. Ice factory in Kosia’ar (Hadramout government)Same as above
    Transport Sector
    35. Yemen navigation linesShort-list ready for HC approval
    36. Aden dockyards companySame as aboveLabor force estimate in 1997: 366
    37. Port of NashtounConsultant’s report was submittedOne of the three semi-large enterprises whose pre-privatization strategy is covered by the IDA Project
    Supply and Trade Sector
    38. Public corporation for building material trade (Aden)HC approved sale of assets in June 2000Labor force estimate in 1997: 612; Evaluation finished prior to 10/98
    39. Public corporation for textiles and electric suppliesSame as aboveLabor force estimate in 1997: 793
    40. Yemen company for free trade— Al-Nasr, AdenSame as aboveLabor force estimate in 1997: 331 Evaluation finished by 3/99
    41. Caltex silos complex— subsidiary of the Yemen trade corporation (Aden)HC approved privatization in June 2000Labor force estimate in 1997: 60
    42. Central refrigeration plant— subsidiary of the Yemen trade corporation (Aden)Short-list ready for HC approvalLabor force estimate in 1997: 192
    43. Central bakery and mills in Taiz— subsidiary of the public trade corporation for foreign trade and grainsSame as aboveLabor force estimate in 1997: 86
    44. Central bakery and mills in Sana’a— subsidiary of the public trade corporation for foreign trade and grainsA contract was signed with a local consultant company for performing the evaluationLabor force estimate in 1997: 73
    45. Central refrigeration plants in Lahaj, Abyan, Shabwah and Al-Mahrah— subsidiaries of the Yemen Trade CorporationShort-list ready for HC approval
    46. Public corporation for building material trade in Lahaj, Abyan, Shabwah and Hadramout.HC approved sale of assets in June 2000Evaluation completed by 3/99
    Telecommunications Sector
    47. Mobile services company (GSM)The High Tendering Committee is evaluating bidding offers to choose the most successful two bids
    48. Telephone boothsWork in progress
    Financial Sector
    49. National Bank of YemenSale procedures to be decided in June HC meeting
    50. Yemen Bank for Reconstruction and DevelopmentRestructuring projected to be completed by end 2000, at which time sales procedures could start
    51. Housing bankStrategy still under preparationRecently turned over to TPO to carry out process
    52. Industrial bankCommittee to liquidate the bank appointed in October 1999
    53. Agriculture bankRestructuring plan approved by cabinet Bids being taken (until mid-February) from companies recommended by the World Bank to conduct the restructuring
    Source: Technical Privatization Office.
    Table A.37.Social Fund for Development: Total Investment and Disbursement up to September 30, 1999(According to Governorates)
    GovernorateNumber of
    Committed ($)Disbursed ($)Percentage of
    Sana’a (Capital)543,291,222890,23127
    More governorates19495,886189,99738
    Source: Social Fund for Development Newsletter-Issue No.8 (October-December, 1999).

    Recent Occasional Papers of the International Monetary Fund

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    206. The Dominican Republic: Stabilization, Structural Reform, and Economic Growth, by Alessandro Giustiniani, Werner C. Keller, and Randa E. Sab. 2001.

    205. Stabilization and Savings Funds for Nonrenewable Resources, by Jeffrey Davis, Rolando Ossowski, James Daniel, and Steven Barnett. 2001.

    204. Monetary Union in West Africa (ECOWAS): Is It Desirable and How Could It Be Achieved? by Paul Masson and Catherine Pattillo. 2001.

    203. Modern Banking and OTC Derivatives Markets: The Transformation of Global Finance and Its Implications for Systemic Risk, by Garry J. Schinasi, R. Sean Craig, Burkhard Drees, and Charles Kramer. 2000.

    202. Adopting Inflation Targeting: Practical Issues for Emerging Market Countries, by Andrea Schaechter, Mark R. Stone, and Mark Zelmer. 2000.

    201. Developments and Challenges in the Caribbean Region, by Samuel Itam, Simon Cueva, Erik Lundback, Janet Stotsky, and Stephen Tokarick. 2000.

    200. Pension Reform in the Baltics: Issues and Prospects, by Jerald Schiff, Niko Hobdari, Axel Schimmelpfennig, and Roman Zytek. 2000.

    199. Ghana: Economic Development in a Democratic Environment, by Sérgio Pereira Leite, Anthony Pellechio, Luisa Zanforlin, Girma Begashaw, Stefania Fabrizio, and Joachim Harnack. 2000.

    198. Setting Up Treasuries in the Baltics, Russia, and Other Countries of the Former Soviet Union: An Assessment of IMF Technical Assistance, by Barry H. Potter and Jack Diamond. 2000.

    197. Deposit Insurance: Actual and Good Practices, by Gillian G.H. Garcia. 2000.

    196. Trade and Trade Policies in Eastern and Southern Africa, by a staff team led by Arvind Subramanian, with Enrique Gelbard, Richard Harmsen, Katrin Elborgh-Woytek, and Piroska Nagy. 2000.

    195. The Eastern Caribbean Currency Union–Institutions, Performance, and Policy Issues, by Frits van Beek, Jose Roberto Rosales, Mayra Zermeño, Ruby Randall, and Jorge Shepherd. 2000.

    194. Fiscal and Macroeconomic Impact of Privatization, by Jeffrey Davis, Rolando Ossowski, Thomas Richardson, and Steven Barnett. 2000.

    193. Exchange Rate Regimes in an Increasingly Integrated World Economy, by Michael Mussa, Paul Masson, Alexander Swoboda, Esteban Jadresic, Paolo Mauro, and Andy Berg. 2000.

    192. Macroprudential Indicators of Financial System Soundness, by a staff team led by Owen Evans, Alfredo M. Leone, Mahinder Gill, and Paul Hilbers. 2000.

    191. Social Issues in IMF-Supported Programs, by Sanjeev Gupta, Louis Dicks-Mireaux, Ritha Khemani, Calvin McDonald, and Marijn Verhoeven. 2000.

    190. Capital Controls: Country Experiences with Their Use and Liberalization, by Akira Ariyoshi, Karl Habermeier, Bernard Laurens, Inci Ötker-Robe, Jorge Iván Canales Kriljenko, and Andrei Kirilenko. 2000.

    189. Current Account and External Sustainability in the Baltics, Russia, and Other Countries of the Former Soviet Union, by Donal McGettigan. 2000.

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    185. Oman Beyond the Oil Horizon: Policies Toward Sustainable Growth, edited by Ahsan Mansur and Volker Treichel. 1999.

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    168. Exit Strategies: Policy Options for Countries Seeking Greater Exchange Rate Flexibility, by a staff team led by Barry Eichengreen and Paul Masson with Hugh Bredenkamp, Barry Johnston, Javier Hamann, Esteban Jadresic, and Inci Ötker. 1998.

    167. Exchange Rate Assessment: Extensions of the Macroeconomic Balance Approach, edited by Peter Isard and Hamid Faruqee. 1998

    166. Hedge Funds and Financial Market Dynamics, by a staff team led by Barry Eichengreen and Donald Mathieson with Bankim Chadha, Anne Jansen, Laura Kodres, and Sunil Sharma. 1998.

    165. Algeria: Stabilization and Transition to the Market, by Karim Nashashibi, Patricia Alonso-Gamo, Stefania Bazzoni, Alain Feler, Nicole Laframboise, and Sebastian Paris Horvitz. 1998.

    164. MULTIMOD Mark III: The Core Dynamic and Steady-State Model, by Douglas Laxton, Peter Isard, Hamid Faruqee, Eswar Prasad, and Bart Turtelboom. 1998.

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    Note: For information on the title and availability of Occasional Papers not listed, please consult the IMF Publications Catalog or contact IMF Publication Services.

    These estimates are based on the two countries’ national accounts using official exchange rates, which were well below parallel market rates in both countries.

    Illiteracy in the PDRY was reduced from 97 percent in 1967, when the PDRY was formed, to 59 percent in 1985; at that point the YAR’s illiteracy rate was still 80 percent (Dunbar, 1992).

    Shabwah was closed down in 1994 after disappointing results, mainly due to the inappropriate recovery methods introduced in the late 1980s.

    See Arab Oil and Gas Directory, various issues; some information can also be found on the World Wide Web site of the Ministry of Oil and Mineral Resources (

    For example, contracts specified which activities would be undertaken in the exploration phase, such as the numbers of wells to be drilled and the kind and amount of seismic data to be produced and analyzed. Funds committed in the exploration phase, generally on the order of tens of millions of dollars, were also stated.

    Cost oil is the amount recoverable by the operator per year to cover expenses during the appraisal and exploration period as well as operating costs.

    As an illustration, assume that production is at 100,000 b/d, the share of cost oil is 50 percent, and profit sharing is 20—80 in favor of the government. The company then receives 50,000 b/d as cost oil plus 20 percent of the remaining 50,000 b/d, or 10,000 b/d, as profit, while the government receives 40,000 b/d.

    The first was signed in September 1981 with the U.S. company Hunt Oil over a 16,890-square-kilometer area located in what was then North Yemen, in the onshore Tihama area (the Marib block). In addition to shares of cost oil and profit distribution, the terms of the agreement specified a 10 percent royalty to the government on the fraction of production in excess of 100,000 b/d. In September 1986 a consortium consisting of CanOxy and Athens-based Consolidated Contractors International Company was awarded two onshore tracts in the Masila region of South Yemen. These tracts, totaling 35,548 square kilometers, turned in the second most important oil findings in Yemen after Marib. In April 1987 the South Yemeni government awarded Total of France the 15,827- square-kilometer East Shabwa concession, located northeast of Aden. A consortium consisting of Total, Hunt Oil/Exxon, the Kuwait Foreign Petroleum Exploration Company (Kufpec), Mashino import, and Zarubezhgeologia signed an agreement in 1990 with the Yemeni Company for Investment in Oil and Mineral Resources for the exploration of Jannah, a tract of land in northern Yemen measuring 2,372 square kilometers, with a signature bonus of $6 million. The following year Nimir Petroleum Company (NPC) signed an exploration agreement for the Ayad block, also in northern Yemen, obtaining a much larger signature bonus of $27 million and a production bonus of $5 million at a rate of output exceeding 50,000 b/d. Oil had been found in the Ayad block earlier in the 1980s, but the company that held the concession at the time later relinquished it.

    In the revised agreement with CanOxy, for example, costs would be recovered out of 50 percent of crude oil produced instead of the previous 28 percent. The original 10 percent flat royalty rate was replaced with a sliding scale, rising from 3 percent on production up to 25,000 b/d to 10 percent on production exceeding 100,000 b/d. Under its revised agreement, NPC would collect 70 percent of revenue generated on production up to 25,000 b/d as cost oil (instead of the previous 24 percent). Once that allocation has been made, the company would pay the government 3 percent as a royalty, and the remaining profit would be split evenly between NPC and the government. Similarly, in early 2000 the government finalized amendments raising companies’ profit share to the share in the production-sharing agreement with the Norwegian company DNO, which operates Howarim (Block 32).

    Of these reserves, 413 million barrels are located in the Marib block, 1,410 million in the Masila block, 181 million in the Shabwah block, 281 million in the Jannah block, 107 million in the Ayad block, and 25 million in the Howarim block.

    Masila is currently the country’s most productive block. Production there started in July 1993 at an initial rate of 40,000 b/d and by 1999 reached 207,000 b/d on average. CanOxy reported that operating costs of the Masila fields were under $1 a barrel in 1999; it also invested about $60 million in continued field development for that year. However, if no new discoveries are made, Masila’s production could begin to decline in 2001 by an average of 9,000 b/d a year. Marib, the country’s second-largest and oldest production field, peaked in 1994 at 185,000 b/d; average production has since declined at a rate of about 14,000 b/d a year. This trend decline is expected to continue over the medium term, albeit at a slower pace. Without further investment for secondary or tertiary extraction, Marib’s output could decline to levels below 40,000 b/d by 2005. Jannah is the most promising block of those that emerged in the late 1990s. Production started in 1996 at about 4,000 b/d and rapidly rose to reach 48,000 b/d in 1999. Output rose further, to about 68,000 b/d in 2001, and to keep on increasing annually by 5,000 to 6,000 b/d for the near term. Shabwa came on stream in December 1997, and its output is expected to reach 27,000 b/d in 2000, from a current level of 17,000 to 18,000 b/d. This increase is owed to the development of two recently discovered fields on its tract, and this new level should be sustained in the near term. Some production took place in the Ayad block from 1988 to early 1990, when Technoexport operated the block. NPC took over in 1991 and resumed production in 1992 at a low level of 5,000 b/d. The civil war in Yemen caused the suspension of NPC’s operations, and production (at a low rate of 1,000 b/d) resumed only in 1997, after amendment of the terms of agreement with the government. Given the difficult geological conditions in the Ayad tract, production is expected to decline steadily over the near term. Howarim, Block 32, is the sixth and latest block to produce oil in Yemen. As previously noted, it is operated by the Norwegian company DNO and came on stream in early 2001, with initial production from two wells in the Tasour field of about 5,000 to 7,000 b/d. Other exploration blocks (S1, S2, 9, and 15) yielded oil that added about 380 million barrels to recoverable reserves; production could start within a couple of years.

    The formulas used by the two refineries differ. YPC pays the Marib refinery average monthly prices quoted on the Mediterranean market; however, it pays the ARC daily prices quoted by Platts Marketscan News from the Rotterdam market, plus a premium of $17 a ton. The premium supposedly reflects remuneration for shipping services but may also include an explicit subsidy to compensate for the refinery’s inefficiency

    Data on government crude oil revenues for Egypt (measured by crude oil receipts of the state petroleum company) were not available for fiscal years 1989/90, 1991/92, and 1992/93 (the data reported in Figure 2 correspond to fiscal years). For both Syria and Yemen, the fiscal year is the same as the calendar year; for Egypt, 1990 refers to data for fiscal year 1989/90, and so on.

    Unstable correlation patterns between trade price indices and output have often been observed in data for both developed and developing countries. For example, see Backus and Crucini (2000).

    In other words, the terms-of-trade effect = NX/P – (X/Px – M/Pm), where NX is the nominal trade balance, P is a price deflator for the trade balance (the consumer price index is used here as a proxy), X and M are nominal exports and imports, respectively, and Px and Pm are their respective price deflators.

    About 13.5 trillion cubic feet in the form of associated and nonassociated gas is concentrated in the Marib block; the rest is found in the Jannah block. Recent discoveries in Block S1 could add some 2 trillion cubic feet to this stock.

    The debt of the former PDRY to the former Soviet Union was inherited by the unified Yemen and Russia, respectively.

    Given the difficult external debt position, the government’s external borrowing policy was to avoid new borrowing on commercial terms, to carefully consider any new concessional borrowing, and to provide government guarantees only on supplier credits for food imports.

    Debt obligations to the former CMEA creditors were viewed largely as “political” rather than “economic” debt.

    External debt-service obligations during 1994-95 were estimated at $1.8 billion on a commitment basis, but only $205 million was paid.

    The participating creditor countries were Denmark, France, Germany, Italy, Japan, the Netherlands, the United Kingdom, and the United States.

    The 1996 agreement did not include late interest; by the end of 1996 this amounted to $542 million, 90 percent of which was owed to Russia.

    By the end of 1996, the stock of Yemen’s external debt stood at $11.1 billion, or 173 percent of GDP, and the stock of external arrears reached $7.0 billion. Debt to Russia, evaluated at the loan contracting exchange rate of 0.6 ruble to the dollar, accounted for 62 percent of Yemen’s total debt and 77 percent of its amortization and interest arrears.

    Determination of the rate of discount was based on the fact that Yemen is an IDA-only country (that is, it is eligible for World Bank Group borrowing only from that organization’s concessional lending affiliate, the International Development Association), for which Russia was the largest military creditor among the Paris Club creditors. Russia’s agreement to the discount was based on the official Soviet Gosbank exchange rate of 0.6 ruble to the dollar and a conversion rate of the transferable ruble (in which the original claims were denominated) of 1 ruble to the dollar.

    As of the end of 1999, the bilateral agreements implementing the Agreed Minute had been signed with all Paris Club creditors except France.

    This ensured comparable treatment with the official debts, included in the Paris Club agreement, owed by the government of Yemen to the Russian government. As a consequence, the effective buyback price for the “Russian debt” component of this operation was 2 cents on the dollar of the principal amount of eligible debt

    Of this amount, $1 million was intended for incidental costs related to closing the operation, auditing the records, and protecting against exchange rate fluctuations.

    Implementation of the commercial debt buyback operation would further reduce the stock of external debt-service arrears to $760 million, which represents arrears to non-Paris Club bilateral creditors from whom the Yemeni authorities have requested debt relief on terms comparable with those obtained from the Paris Club.

    In this respect, the Yemeni experience differs from German unification. In Germany, practically all laws and regulations of the market economy of the Federal Republic of Germany were immediately adopted in the formerly centrally planned east, and many high-ranking East German civil servants lost their jobs.

    At the end of 1994, the official rate of YRls 12.01 to the dollar was about one-eighth of the parallel rate of YRls 103 to the dollar.

    Despite nominal increases on the order of 25 to 30 percent, wages did not keep pace with inflation, which accelerated from 34 percent to 71 percent in the same period. The fact that the wage bill as a share of GDP remained stable while real wages declined reflects the large differences between the GDP deflator and the consumer price index (CPI). The GDP deflator gave a higher weight to official transactions, recorded at the stable official exchange rate, than did the CPI. Comparisons with later years should be made cautiously because of substantial adjustments in the calculation of national accounts after the unification of exchange rates.

    The informal financial market was dominated by moneychangers, the largest of whom accepted deposits from the public (see Section IV).

    As a result, the government is now indifferent between exporting oil and selling it to domestic refineries; meanwhile the implicit consumption and production subsidies have become transparent cash subsidies.

    For example, a ceiling on credit growth was set at 50 percent in 1996, a year in which credit actually fell. In early 1997 credit growth ceilings were once more set at 25 percent, and again these ceilings were not binding. The central bank has not renewed these ceilings since then, but prefers to keep open the option to impose new ceilings should extreme circumstances warrant them.

    Estimates of recoverable resources vary widely and are changing rapidly. In particular, a recent treaty settling border issues with Saudi Arabia may boost exploration activity and thus the likelihood of discovering additional resources. The following discussion should therefore be interpreted as only illustrative of broad orders of magnitude.

    A discussion of the relationship between sustainability and government investment policies can be found in Easterly and Fischer (1990).

    Pindyck (1999) was able to reject the unit root hypothesis only after considering more than 70 years of data. Cashin, Hong, and McDermott (1999) find that petroleum price shocks are infinitely persistent. A survey of the stochastic properties of oil prices can also be found in Engel and Valdes (2000).

    The literature on this subject includes Tersman (1991); Liuksila, Garcia, and Bassett (1994); Chalk (1998); and Alier and Kaufman (1999).

    This assumes that a government is neither more nor less impatient to consume resources than implied by the interest rates prevailing on international capital markets.

    At 1999 wealth levels, assuming annual total factor productivity (TFP) growth of 1 percent would add about 1 percent of GDP to sustainable consumption. However, during the 1990s estimated TFP growth was negative (see Section VI).

    The reasoning is as follows: oil wealth is evaluated at world market prices and, hence, domestic consumption depletes that wealth by the volume consumed evaluated at world market prices, not at administered prices.

    The incentive rate was increased to YR1s 25 to the dollar on July 1, 1993, and imports by the government and public sector enterprises, as well as imports of LPG, were moved to the parallel market. Subsequently, commercial banks were allowed to operate in the parallel market on behalf of their customers, but this permission was withdrawn on June 7, 1994, with the objective of containing the depreciation in the parallel market.

    In addition, there was a diplomatic rate of YR1s 5 to the dollar for staff working in Yemeni embassies abroad.

    Importers of wheat and flour were required to purchase foreign exchange at the free market rate, and payment of a rial subsidy to the importers was made by the Ministry of Finance upon transfer of ownership of the imported wheat to domestic distributors. The rial subsidy was eliminated in June 1999.

    Available information indicates that neither the central bank nor other market participants are involved in forward or derivative operations.

    A positive import list is one in which only those items listed may be imported; a negative list is one in which only those items listed may not be imported.

    The only exceptions were the importation of equipment by foreign oil companies; the importation of spare parts to meet emergency needs of manufacturing enterprises, subject to an annual limit of $50,000 for each enterprise; and the importation of machinery and spare parts worth up to $40,000 by Yemeni nationals returning from abroad to set up a small business. In the latter case, authorization from the Ministry of Supply and Trade was required, and the payment had to be made out of expatriated foreign exchange savings.

    In addition to coffee, import bans continued to apply to 21 categories of fruit and vegetables classified according to the four-digit Harmonized Nomenclature System code, introduced in October 1997. Importation of the following items was prohibited for security, religious, or environmental reasons: weapons and explosives, narcotics, pork and pork products, alcohol, and rhinoceros horn.

    A special tariff rate of 70 percent applied to tobacco and tobacco products for revenue reasons.

    Export licensing is required for statistical purposes, and the Ministry of Fisheries limits the export of certain categories of seafood products. Exports of antiques and archeological items exceeding $100 in value are prohibited

    See IMF (1997) for a description of the methodology for deriving the trade restrictiveness index.

    Tax regimes for oil companies, the major foreign investors, were negotiated separately and individually and were not covered by the income tax laws.

    Presidential Decrees No. 12 and 255 of 1999; these also included a provision for the taxation of rental income, but the tax was limited to one month’s rent.

    In addition to wheat and wheat flour, the Yemeni government subsidized rice, milk, sugar, and medicine. These subsidies were relatively unimportant in magnitude and were eliminated in 1995.

    The government was still engaged in settling some remaining arrears with wheat importers in early 2000.

    Since the removal of the wheat subsidy, the amount of foreign exchange sales by the central bank has not exceeded $200 million a year, compared with the direct provision of $400 million to $600 million annually to wheat importers before wheat imports were liberalized. At the same time, wheat imports have declined by about $100 million a year relative to their preliberalization levels. This suggests that, as a result of the subsidy, between $100 million and $300 million a year was accruing as rents to wheat importers and distributors, probably in the form of over invoicing and smuggling to neighboring countries, where the price of wheat was higher.

    The subsidized exchange rate equalized the administered predistribution price with the actual price of imported wheat at the port of entry.

    The minister of transport has reported that these by-laws are already being implemented; trucking licenses are being granted to all applicants with adequate equipment.

    World Bank Country Development Report, Phase I, “Judicial and Legal System Building Block.”

    Such committees have already been established in various ministries (agriculture, supply and trade, and industry), as these have already carried out the privatization of some of the enterprises under their jurisdiction.

    These ratings relate to international banks. This regulation will be modified to include local banks once a local rating system is in place.

    Saudi Arabia is included as a comparator because it is a neighboring country; Egypt and Jordan were selected because these countries have close relations with Yemen; Pakistan was selected because, like Yemen, it is eligible to borrow from the Poverty Reduction and Growth Facility; and the United Kingdom was selected as a representative industrialized country.

    Between 1997 and 1999 the operations of the private and the public funds were merged. After expected cost reductions could not be realized and private sector compliance fell, the merger was reversed in 1999.

    The poverty line for an individual was estimated at YR1s 2,600 per month in 1999.

    The managing director is also a member of the board, and the office of the managing director acts as its secretariat.

    For example, the SFD provided management and skills training in accountancy for 68 agricultural cooperatives in the governorates of Sana’a and Ibb, in close cooperation with the Federation of Agricultural Cooperatives.

    For example, the SFD provided the SWF with technical assistance in developing a new survey to determine eligibility, establishing an electronic database of beneficiaries, and acquiring skills in relevant software to maintain this database.

    The SFD insists on a participatory process in most of its projects: local communities participate both in defining the needs and in setting up and running the projects. Sometimes their contribution extends to 50 percent of the project’s design and implementation work.

    The SFD pays particular attention to females and juveniles; for example, in 1998 a project to improve the living conditions of jailed women was implemented. A school was established in the central jail to provide literacy classes and skills training. The SFD took juveniles out of the central jail and placed them in a hostel. Civil orphan hostels were also established, and there are projects under way to institute seven hostels for boys and girls. Of all the microenterprise development projects implemented so far, more than 50 percent targeted women, and more than 60 percent were in rural areas

    Some SFD projects (in education, for example) are implemented at a third of what it would cost the government to implement, and at a much quicker pace. For the building of schools it now provides efficiency benchmarks for outside government contracts.

    This faster-than-expected growth of the SFD’s programs forced it to shorten its first operational phase from five years to three and to apply for a larger ($100 million) grant from the World Bank to finance a second five-year phase of operations

    Most of the SFD programs are based on Islamic banking, for consistency with the tradition and expectations of the concerned communities.

    Rural community organizations in North Yemen were first known as Local Development Agencies. They were funded by private donations, zakat, and remittances and had a large degree of autonomy. Law No. 12 of 1985 reduced that autonomy by transferring the power and responsibility to provincial governors and reorganizing the cooperatives into the Local Councils for Cooperative Development.

    These institutions raise money from the government as well as from individuals and businesses. There are, however, no clear guidelines dictating the extent of government assistance, which is then administered on an apparently ad hoc basis, and bilateral international assistance to these institutions is still limited.

    Despite improvements in the methodology underlying the national accounts compiled by the Central Statistics Organization of Yemen (CSO), GDP figures remain unreliable, largely because of a lack of basic underlying data in many areas, as well as a lack of adequate deflators for all components of GDP. Moreover, the existence of a multiple exchange rate system before 1996 probably biases the data for 1990-96 downward, as these may overstate the importance of transactions at the highly overvalued official exchange rate. In the absence of alternative data sources (except for the oil sector), official CSO data are used as the base for assessing broad trends in various sectors of the economy.

    Locally grown wheat is traditionally viewed by Yemenis as having higher quality and better taste than imported wheat, which creates demand for it despite its higher price; this might have mitigated the adverse effect of import subsidies on local production.

    These were mostly farms that were returned to their past owners after having been nationalized by the socialist regime in the south.

    For example, the rapid spread of the Newcastle disease among the country’s livestock in the last quarter of 1999 was halted by the government, which brought the percentage of livestock infected down from about 26 percent in December 1999 to less than 4 percent in February 2000.

    Available information is based primarily on the 1994 Population Census; other sources include the Household Expenditure Survey of 1998, the Demographic Survey of 1997, and the Educational Survey of 1998-99. All these surveys were not primarily designed to collect detailed information on the labor market. The CSO for the first time conducted a detailed labor market survey in 2000.

    Results from the 1998 household survey indicate that the average age at first marriage for women is 20 years.

    According to the 1998 household survey, the female illiteracy rate is 71 percent, compared with 24 percent among men.

    According to a report by the United Nations Development Programme and the Yemeni Ministry of Planning (UNDP and Ministry of Planning, 1999), registered graduates on the waiting list at the Ministry of Civil Service and Administrative Reform totaled 15,400 at the end of June 1999. Of these, 51.3 percent held degrees in education; 20.5 percent in arts, science, information, religious studies, and law; 9.8 percent in business and economics; 9.6 percent in medicine; and 8.8 percent in engineering, agriculture, computing, and petroleum. In 1999 available government jobs were distributed among education (79.1 percent), health (9.2 percent), other administrative units (6.5 percent), and various positions at other public sector units (5 percent).

    Since 1981 the minimum wage has been set at YR1s 6,000 a month, but apparently this has never been enforced.

    CPI data are compiled by the CSO. In January 1995 a new series was introduced, consisting of a weighted average of the price indices for Sana’a and Aden, where the weights correspond to consumption shares obtained from the 1992 Household Budget Survey. Before that the CPI was based on series from five major cities, using data from the 1977/78 Household Budget Survey, but weighted across cities by population share. Despite the improvement underlying the CPI introduced in 1995, these data remain weak because of poor price collection and absence of monitoring, as well as insufficient coverage. Current efforts are concentrated on producing yet another CPI, covering 20 cities and using new consumption shares derived from the 1998 Household Budget Survey.

    It is assumed that the effect of administrative prices is captured by the transportation price index (because it partly accounts for petroleum product prices), the fuel and lighting price index (because it partly accounts for petroleum product prices and electricity tariffs), and the cereals price index (because it includes wheat prices). This might not be a precise measure, given that information on individual items within these categories is not available (and these categories certainly include other items not subject to price setting). Figure 17 indicates, however, that changes in administered prices seem to be reflected in these categories to an extent sufficient to warrant the assumption. Hence in this section the CPI excluding administrative prices refers to the CPI calculated after excluding these items.

    The HDI is an index constructed annually by the UNDP since 1990 to measure average achievement in basic human development. The indicators used in calculating the HDI include life expectancy, educational attainment (measured through literacy and enrollment rates), and income per capita.

    Sources of the data cited in this section are the 1998 Household Budget Survey of the CSO supplemented by the UNDP Poverty Policy Framework for Yemen, the World Bank 1996 Poverty Assessment Report (World Bank, 1996), the IMF World Economic Outlook database, the 1998 CSO Statistical Yearbook, (CSO, 1998), and the World Bank’s World Development Indicators.

    The UNDP estimated the food poverty gap—the difference in spending on food between poor and the poverty line (approximated by spending by the nonpoor)—at $160 million a year, or 2 percent of GDP, in 1998.

    Hashem (1996) reports that 13 percent of the population moved from rural to urban areas between 1992 and 1994. This heavy migration may be due not only to job hunting but also to a search for better living conditions.

    The 1996 World Bank Poverty Assessment Report (World Bank, 1996) estimated the numbers of the first three groups at 100,000, 10,000, and 100,000, respectively.

    The World Bank Poverty Assessment Report mentions that less than 17 percent of government subsidies benefited the poorest 20 percent of the population in 1995.

    Weaknesses in the investment environment include ineffective commercial courts, poor enforcement of contracts and land ownership rights, lack of understanding and familiarity with commercial law, poor infrastructure, lack of skilled labor, and governance problems in the public administration.

    See The Economist, April 10, 1999, page 61

    See Yemen—A Travel Survival Kit, Lonely Planet Publications, January 1996, page 87.

    See Business Middle East, January 1, 2000, The Economist Intelligence Unit, page 11.

    See Yemen—Consular Information Sheet, September 14, 1999, U.S. Department of State website,, and Business Middle East, February 1, 1999; The Economist Intelligence Unit, page 10.

    See Yemen—Travel Warning, November 5, 1999, U.S. Department of State website, warning.html.

    Preliminary estimates suggest that, as a result, tourist arrivals in 1999 declined by about 35 percent relative to 1998 and tourism foreign exchange receipts stood at less than 60 percent of their 1998 level. The two largest hotels in Sana’a have seen their occupancy rates drop below 50 percent, and Yemenia Airlines was reported to have lost more than US$2 million in revenues.

    Currently, there are about 250 hotel establishments offering some 7,700 rooms.

    The potential absorptive capacity of the tourism sector in Yemen is rather limited. According to local businessmen, existing historic and scenic attractions can potentially accommodate no more than 150,000 visitors a year. This requires the tourism sector to be oriented towards low volumes and high yields, attracting the more affluent category of international tourists. These are mostly senior citizens in the middle and higher income groups, who require more comfortable accommodation than younger and more adventurous backpackers.

    The most recent examples of the latter include the proposed construction of Burum Port, 20 km southwest of Mukalla, and a gas pipeline through a white sand beach at Bir Ali.

    Three kidnappers in the 1998 case, including the group leader, were sentenced to death by the court and have been executed.

    According to a local observer, there is currently a lot of duplication and a lack of coordination the various government and public entities involved in the tourism sector, some of which also appear to be overstaffed and lack the technical capability to carry out their statutory obligations satisfactorily

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