© 2002 International Monetary Fund
Production: IMF Graphics Section
Figures: IMF Graphics Section
Typesetting: Danielle Bujosa, Choon Lee
Library of Congress Cataloging-in-Publication Data
Yemen in the 1990s: from unification to economic reform/ Klaus Enders …
[et al.] — Washington, D.C.: International Monetary Fund, 2001.
p. cm. — (Occasional paper; 208)
Includes bibliographical references.
ISBN 1-58906-042-3
1. Yemen—Economic conditions. 2. Yemen—Economic policy.
I. Enders, K. II. Occasional paper (International Monetary Fund); 208.
HC415.34.Y466 2001
338.9533—dc21
20011051781
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Contents
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Preface
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List of Abbreviations
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I Overview
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II External Environment: Politics, Oil, and Debt
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Political Developments: Unity, Gulf Crisis, Civil War, and Democracy
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Yemen’s Emergence as an Oil Producer
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External Debt
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III Macroeconomic Policy During 1990-99
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Crisis, Controls, and Stagnation: Macroeconomic Policies During 1990–94
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Reform and the Return of Stability and Growth During 1995–99
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Preserving the Oil Wealth: A Long-Term View of Yemen’s Fiscal Policy Stance
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IV Microeconomic Reforms
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Foreign Exchange Regime and Foreign Trade Reforms
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Tax Reform
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Public Expenditure Reform
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Reform of the Regulatory Environment
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Privatization
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Financial Sector Reforms
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V Poverty and Social Safety Net Policies
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Pensions
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The Social Welfare Fund and Other Cash Transfers
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The Social Fund for Development
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Informal Safety Nets and Development Support Organizations
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VI Economic Performance from 1990 to 1999
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Growth and Employment
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Inflation
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Poverty and Social Indicators
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Saving, Investment, and External Vulnerability
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Annexes
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I Tourism Sector in Yemen: Problems and Prospects
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II Summary of the Tax System as of end-June 2000
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References
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Statistical Appendix
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Boxes
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IV 1. Reduction of Subsidies, 1995–99
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2. The Aden Free Zone
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3. The Yemeni Banking System
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VI 4. Accounting for Growth in the Non-Oil Sector
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5. The Role of Qat in the Yemeni Economy
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6. Provisions of Current Labor Legislation
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Tables
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Section
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II 1. Selected Economic Indicators, 1990–99
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2. Sensitivity to Oil Price Changes, 1990–99
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3. Oil-Related Volatility in the Economy, Compared with Other Oil Exporters in the Region
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4. Balance of Payments, 1990–99
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III 5. Central Government Finance, 1990–99
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IV 6. Middle Eastern and North African Countries: Trade Restrictiveness Rating
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7. Petroleum Products Prices Compared to World Market Levels (March 2000)
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8. Adjustments in Administered Retail Prices, 1994—99
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9. Distribution of Public Employees by Sector, 1998
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10. Regional Comparison of Expenditures on Defense, Education, and Health, 1994–98
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V 11. Social Fund for Development—Accumulated Investment, Disbursement, Number of Expected Beneficiaries, and Job Opportunities, up to September 30, 1999, According to Sector
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VI 12. Macroeconomic Indicators Comparing Pre-Reform and Reform Period, 1991–99
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13. Distribution of Labor Force by Employment Status, Age Group (+10 Years), and Gender, 1994
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14. Student Enrollment and Graduation from Colleges and Universities in 1998/99
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15. Phasing of Macroeconomic Adjustment, 1990–99
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16. Vulnerability Indicators
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Annex
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I 17. Visitor Arrivals and Tourism Revenues
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18. Average Tourism Statistics Since Unification
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Statistical Appendix
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A1. Social and Demographic Indicators 1995 and 1997
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A2. Selected Economic and Financial Indicators, 1994–99
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A3. Sectoral Origin of Gross Domestic Product at Current Prices, 1994–99
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A4. Use of Resources at Current Prices, 1994–99
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A5. Sectoral Origin of Gross Domestic Product at Constant Prices, 1994–99
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A6. Distribution of Employment (Age 15 Years and Over) by Economic Activity
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A7. Distribution of Employment (Age 10 Years and Over) by Sectors in Urban and Rural Areas, 1998
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A8. Household Income and Expenditure, 1998
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A9. Distribution of Population (10 Years and Over) by Education Level, Region, and Sex, 1994, 1998
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A10. Crude Oil Summary, 1994–99
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A11. Oil Exploration Blocks Awarded in 1996–99
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A12. Domestic Consumption of Petroleum Products, 1994—99
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A13. Output of Industrial Products, 1994–99
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A14. Production, Area, and Yield of Major Crops, 1994–99
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A15. Noncrop Primary Production, 1994–99
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A16. Consumer Price Index for Urban Areas, 1994–99
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A17. Domestic Retail Prices for Petroleum Products and Electricity, 1995–2000
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A18. Summary of Central Government Finance, 1994–99
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A19. Composition of Central Government Revenues, 1994–99
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A20. Composition of Central Government Expenditure, 1994–99
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A21. Current and Capital Transfers to Public Enterprises, 1994–98
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A22. Monetary Survey, 1994–99
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A23. Factors Affecting Domestic Liquidity, 1994–99
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A24. Balance Sheet of the Central Bank, 1994–99
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A25. Balance Sheet of the Commercial Banks, 1994–99
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A26. Interest Rates, 1994–99
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A27. Distribution of Commercial Bank Credit to the Nongovernment Sector
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A28. Commercial and Specialized Banks as of December 31, 1999
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A29. Indicators of Banking System Financial Soundness, 1997–99
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A30. Balance of Payments, 1994–99
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A31. Composition of Exports and Re-Exports, 1994–99
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A32. Direction of Exports and Re-Exports, 1994–99
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A33. Composition of Imports, 1994–99
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A34. Sources of Imports, 1994–99
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A35. Enterprises Privatized/Liquidated, 1997–99
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A36. Enterprises to be Privatized/Liquidated
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A37. Social Fund for Development: Total Investment and Disbursement up to September 30, 1999
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Figures
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Section
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II 1. Actual and Projected Crude Oil Production and Government Share
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2. Republic of Yemen and Selected Comparators: Crude Oil Exports and Revenue
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III 3. Real and Nominal Effective Exchange Rates
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4. Government Revenue from Oil and Taxes
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5. Customs Revenue
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6. Fiscal Balance and Civil Service Wage Bill
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7. Interest Rates
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8. Government Non-Oil Saving and National Wealth
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IV 9. Nominal Rial-Dollar Exchange Rates
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10. Domestic Wholesale Prices of Petroleum Products
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11. Credit and Currency Ratios
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12. Money Velocities and Multipliers
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13. Republic of Yemen and Selected Comparators: Liquidity and Credit Ratios
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14. Republic of Yemen and Selected Comparators: Money Multipliers and Credit Indicators
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VI 15. Composition of Real GDP
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16. Inflation, Money Growth, and Budget Financing
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17. Selected Commodity Price Indices
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18. Republic of Yemen and Selected Comparators: Dependency Ratios
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19. Republic of Yemen and Selected Comparators: Adult Illiteracy Rate
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20. Republic of Yemen and Selected Comparators: Life Expectancy at Birth
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21. Republic of Yemen and Selected Comparators: Infant Mortality Rate
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22. Republic of Yemen and Selected Comparators: Access to Safe Water
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23. Saving and Investment
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Annex
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24. Visitor Arrivals
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The following symbols have been used throughout this paper:
. . . to indicate that data are not available;
n.a. to indicate not applicable;/m.o
— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
– between years or months (i.e., 1994–95 or January-June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (i.e., 1994/95) to indicate a fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
Preface
Most of the material presented in this Occasional Paper was originally prepared as background for discussions in the IMF Executive Board. It has been updated to take account of developments through early 2001. The authors are grateful to the Yemeni authorities for extensive discussions and comments and for their assistance in providing data and other source material.
This Occasional Paper has benefited from valuable analytical analyses from David Moore, Rodney Ramcharan, and Manmohan Singh. The authors are grateful for valuable comments from the staff in the Middle Eastern Department as well as the World Bank. The authors would also like to express their appreciation for valuable research assistance that was provided by Aminata Toure and for careful and patient secretarial assistance from Anne-Barbara Hyde, Wilma Gonzalez Buenaobra, Rochelle Gittens, and Melissa Wills. The authors are also indebted to the External Relations Department, to Mike Treadway who edited the paper, and to Gail Berre who coordinated its production and publication.
The opinions expressed are solely those of the authors and do not necessarily reflect the views of the International Monetary Fund, the Executive Directors, or the Yemeni authorities.
List of Abbreviations
| ARC |
Aden Refinery Company |
| CanOxy |
Canadian Occidental Petroleum |
| CBY |
Central Bank of Yemen |
| CMEA |
Council of Mutual Economic Assistance |
| CPI |
Consumer Price Index |
| CSF |
Civil Service Fund |
| CSO |
Central Statistics Organization |
| DSA |
Debt Sustainability Analysis |
| GAVTT |
General Authority for Vocational and Technical Training |
| GIA |
General Investment Authority |
| GPC |
General People’s Congress |
| GST |
General Sales Tax |
| HBS |
Household Budget Survey |
| HC |
High Commission |
| HDI |
Human Development Index |
| HIPC |
Highly Indebted Poor Country |
| HNS |
Harmonized Nomenclature System |
| IDA |
International Development Agency |
| IMF |
International Monetary Fund |
| KUFPEC |
Kuwait Foreign Petroleum Exploration Company |
| LCCD |
Local Councils for Cooperative Development |
| LMIS |
Labor Market Information System Database |
| LNG |
Liquefied Natural Gas |
| LPG |
Liquefied Petroleum Gas |
| MENA |
Middle East and Northern Africa |
| MOLVT |
Ministry of Labor and Vocational Training |
| MOP |
Ministry of Planning |
| MPH |
Ministry of Public Health |
| NGO |
Non Governmental Organization |
| NPC |
Nimir Petroleum Company |
| NPEC |
Nimir Petroleum Exploration Company |
| NPV |
Net Present Value |
| PAR |
Poverty Assessment Review |
| PDRY |
People’s Democratic Republic of Yemen |
| PEC |
Public Electricity Corporation |
| PTC |
Public Telephone Corporation |
| RGDI |
Real Gross Domestic Income |
| RGDP |
Real Gross Domestic Product |
| RO |
Repurchase Operations |
| SFD |
Social Fund for Development |
| SWF |
Social Welfare Fund |
| TFP |
Total Factor Productivity |
| TIN |
Taxpayer Identification Number |
| TPCS |
Tax on Production, Consumption, and Services |
| TPO |
Technical Privatization Office |
| UNCTAD |
United Nations Conference on Trade and Development |
| UNHCR |
United Nations High Commissioner for Refugees |
| WEO |
World Economic Outlook |
| WTO |
World Trade Organization |
| YAR |
Yemen Arab Republic |
| YBRD |
Yemen Bank for Reconstruction and Development |
| YCIOM |
Yemeni Company for Investment in Oil and Mineral Resources |
| YFZPA |
Yemen Free Zones Public authority |
| YPC |
Yemen Petroleum Company |
| YRG |
Yemeni Reform Group |
| YSP |
Yemeni Socialist Party |