Yemen to Reform Economy, Avoid High Gas Prices

Yemen is planning to follow a new plan of economic and administrative reform and development to increase the country's income without having to raise the price of petroleum products.

Yemeni officials have signed a national partnership agreement on September 21 of this year to form a new government of different political parties, who will immediately execute projects to achieve the economic development.

The agreement was signed due to huge protests on the government's decision to end support on petroleum products. The decision increased the price of one litre of fuel from USD 0.58 to USD 0.93, the diesel price went from USD 0.46 to USD 0.90 and the kerosene rose by 100 percent from USD 0.46 to USD 0.93.

Meanwhile, the Yemeni government said that ending the support aims to protect the country's economy from falling, noting that Yemen had paid about USD 22 billion on petroleum products in the past 10 years.

Yemen paid USD three billion for support in the first half of 2014, which is 20 percent of the budget expenditure. Such spending led to a dangerous drop in economy, causing a deficit of USD five billions.

The government explained that rich people were benefitting the most from the support since poor people have less consumption of petroleum products. With every one Riyal going to the poor, the rich gets 23 Royal from petroleum and 9 Royals from diesel. Thus, the rich receive 20 percent, while the poor gets 10 percent.

The agreement includes providing a partial support on petroleum and diesel, a decision which the new government had already applied by announcing a new pricing of USD 0.69 for both products on September 23. The accord made it imperative for the economic committee to fight corruption in all government and security institutions as part of the national reconciliation process in Yemen.

Employment at the public sector, as the accord stated, should be only through the ministry of civil services which is required to provide Yemeni citizens with work and social security to ensure their future.

The outcome of the national dialogue in Yemen should be respected and fulfilled to make sure that the economic reforms are implemented and maintained through national and international support.

Though, the Yemeni government had provided some snippet of backing national economy through bringing back partial support to oil and diesel subsidies, there is much more to be done.

A solemn gesture of global support to Yemen came from the International Monetary Fund (IMF) which provided the Yemeni government with around USD 552.9 million in credit facility arrangement. The first batch of the arrangement, about USD 73.8 million, was given to Yemen last September.

Since the crisis of 2011 which was the result of the "Arab Spring, Yemenis tried to overcome challenges posed by the alarming security and economic situations. In 2014, Yemenis finally came to an agreement after 10 months of grueling political debates with the aim of building a unity government by 2015 through legislative and presidential elections.