2014年-世界发展银行全球_Economic_Fiscal_and_Social_Challenges_in_the_Early_Phase_of_a_Post_Conflict_Yemen___Yemen_Policy_Note_2_53页_2mb

Summary of Yemen Policy Note 2

Core Content

This document outlines the economic, fiscal, and social challenges Yemen faces in the early phase of post-conflict recovery. It emphasizes the importance of stabilizing the macroeconomy as a prerequisite for achieving peace and reaping the peace dividend. The report provides recommendations for immediate and medium-term actions, focusing on restoring public financial management (PFM), fiscal revenues, hydrocarbon sector recovery, and rebuilding trust and legitimacy in government institutions.

Key Messages

• Stabilizing the macroeconomy is crucial for peace and recovery.
• Restoring foreign reserves to a level of about 3 months of imports (estimated at $4.5 billion) is a priority to enable private sector recovery and economic stabilization.
• Re-establishing the Central Bank of Yemen (CBY) is essential for economic recovery, as it serves as a lender of last resort, balances public and private debt, and facilitates international trade.
• Resuming trade and reviving the hydrocarbon sector requires external debt restructuring and rescheduling.
• Restoring fiscal revenue is critical for funding public expenditure programs and reconstruction efforts.
• Trade and consumption taxes should be prioritized in the short term to support fiscal recovery.
• Legitimacy and trust in government depend on restoring budget integrity and ensuring transparency in public spending.
• A shared recovery is necessary to break the cycle of violence and promote sustainable development.

Main Challenges

1. Economic and Fiscal Challenges

• Sharp contraction of the economy since 2015, with GDP declining by 40%.
• Collapse of public services and institutional functions due to fiscal stress.
• Fiscal deficit reached 14% of GDP in 2016, expected to rise further without peace.
• Fiscal resources have shrunk from 23.6% of GDP in 2014 to 11% in 2016.
• Public sector salaries and wages have not been paid since August 2016.
• Non-hydrocarbon tax collection dropped dramatically in 2016.
• Inflation risks increase due to accumulated arrears and currency shortages.

2. Social Challenges

• High poverty rates, with 35% of Yemenis living below the poverty line (2005 PPP).
• Malnutrition rates are among the highest globally, with 60% of children under five suffering from chronic malnutrition.
• Education access has been severely impacted, with a third of students not attending school since the conflict.
• Demographic pressures are rising, with 2.5–3% annual population growth and 400,000 young people entering the labor market annually.
• Agriculture, the largest sector in terms of water usage, is rain-fed and vulnerable to water scarcity and conflict-related disruptions.

3. Hydrocarbon Sector Challenges

• The hydrocarbon sector contributed 60% of fiscal revenues and 85% of export revenues pre-conflict.
• Oil and gas production declined from 326,000 barrels per day to 30,000 barrels per day in 2016.
• Hydrocarbon exports fell by ~60% in 2015, and total exports dropped to less than 10% of pre-conflict levels.
• Foreign reserves were reduced by ~50% since 2014, with hydrocarbon revenue being a major contributor.
• International oil prices are expected to rise to $50 per barrel, but Yemen's production needs to increase significantly to reach pre-2014 revenue levels.

4. Public Financial Management (PFM) Challenges

• PFM systems are non-functional, with no centralized financial management.
• Treasury Single Account (TSA) is not operational, leading to fragmented financial flows.
• Budget operations have been disrupted, with no capacity to manage public funds.
• Accountability mechanisms are weak, increasing the risk of fiscal leakages.
• Payroll integrity is critical to maintain civil service legitimacy and public trust.

Key Recommendations

Immediate Actions

• Re-establish the Central Bank to restore financial stability and currency control.
• Secure foreign reserves to support recovery imports and private sector engagement.
• Launch an emergency budget for the post-conflict fiscal year.
• Restore budget operations to support state functions and public services.
• Ensure budget transparency to build trust and facilitate accountability.
• Re-establish payroll integrity to maintain civil service legitimacy.

Medium-Term Priorities

• Reform the tax regime to increase fiscal revenues.
• Revive the hydrocarbon sector through investor re-engagement, better utilization of existing investments, and improved investment conditions.
• Establish a project gate-keeping mechanism to prioritize reconstruction.
• Stabilize the financial sector by rebuilding PFM institutions and enhancing fiscal transparency.
• Improve the business climate to promote private sector growth.
• Reform water management to address resource scarcity and improve agricultural productivity.

Conclusion

Yemen's path to peace and recovery is heavily dependent on restoring economic stability, rebuilding public institutions, and re-establishing fiscal and financial systems. The hydrocarbon sector remains a critical component for economic recovery, but diversification and sustainable development are also needed. PFM reform and fiscal transparency are essential to rebuild trust and ensure effective public spending. The recovery of the private sector and social services will be key to long-term stability and sustainable growth in Yemen.