Yemen government curbs travel, recruitment in austerity drive
Thu Jul 10, 2014 11:29am GMT
By Martin Dokoupil
DUBAI (Reuters) - Yemen's president has ordered a raft of austerity steps,
including a review of state-owned companies' viability and curbs on foreign
travel by government officials, to ease pressure on the impoverished state's
crumbling public finances.
Sanaa has struggled to pay public sector salaries and finance food and
energy imports, which has led to power cuts and fuel shortages as a fight
against al Qaeda militants and other rebel groups undermines the state
budget.
In a statement late on Wednesday, the government described President
Abd-Rabbu Mansour Hadi's belt-tightening package as urgent.
Among the measures, recruitment has been frozen for all state institutions
and procurement of cars has been halted. International travel for senior
officials will be restricted, along with the renting of new offices and
expense claims.
"Government officials, including ministers, are to be limited to a maximum
of four overseas trips a year. The maximum duration of stay during official
travel should not exceed five days," the statement said.
"State officials are no longer permitted to travel first or business class,"
it added.
The government did not say how much money it expected to save with the
austerity drive, or elaborate on how it would conduct its review of state
firms' economic viability and when the results might be seen.
Hadi has been trying to stabilise the country for over two years, after
political and economic turmoil forced his predecessor to step down. But the
state's push against Islamic militants and rebels has sparked attacks on
crude oil pipelines that are key to obtaining up to 70 percent of state
revenues.
Sanaa earned just $671 million from exporting crude oil in January-May,
nearly 40 percent less than in the same period last year. The central bank's
foreign asset reserves have shrunk to $4.6 billion, the lowest level since
end-2011.
The government's statement said it would create a specialised military unit
from its special forces to help combat tax and customs evasion in a country
that is awash with weapons.
"Overlapping agencies currently present at custom inspection centres will be
eliminated and custom valuations and tariffs will be reformed," the
statement said. At the same time, the finance ministry is to review the tax
collection process and resolve tax debts.
The government did not announce any fresh measures directly aimed at
reducing widespread corruption, which is a major drain on state funds.
ENERGY SECTOR
The second-poorest Arab nation after Mauritania is hoping to secure a
long-discussed loan from the International Monetary Fund that could help
unlock more donor funds, which have been held back by fears of corruption
and a lack of progress in economic reforms.
Yemen's finance minister told Reuters in May that the country was seeking
"substantially more" than the $560 million which the IMF proposed, and that
the Fund's board was expected to finalise the deal in July.
The IMF has pressed Yemen to cut the energy subsidies which cost it $3.07
billion last year, equivalent to 30 percent of state revenue and 21 percent
of expenditure.
However, reducing subsidies is hard in a country where a third of the
population of 25 million lives on less than $2 a day, and this week's
austerity package did not address subsidies.
Instead, it said the government would review the cost of drilling and
extracting crude oil to bring it down to global averages, while the
ministries of defence and interior would work to resolve security problems
at production sites.
The president also banned the state-owned Public Electricity Corp, which
operates most of Yemen's power generating capacity and the national grid,
from building new diesel power plants, leasing them or financing expansion
of current ones. The PEC is to review contracts and seek to lower the cost
of purchasing power for the grid.
"The government must work on expanding gas and coal powered plants to
replace diesel plants. Plans to install and operate Mareb's Second Gas
Powered Station by the end of January 2015 will be expedited," the statement
said.