IMF
Report Says
Yemen Will
Continue Fuel
Subsidy
Reform, Banks
Exposed
By
Matthew
Russell Lee
UNITED
NATIONS,
January 21 --
The IMF's
Middle East
and Central
Asia
Department
Regional
Economic
Outlook Update
was released
from embargo
on January 21,
just before
the WEF in
Davos and the
day after the
Houthis took
over the
Presidential
Palace in
Sana'a.
Starting with
the numbers,
specifically
“Fiscal
Balances 2014
and 2015,” the
IMF lists a
5.4% downturn
for Yemen in
2014, and a
5.2% downturn
in 2015. Might
the latter
number grow
worse?
On the
financial
sector, the
IMF report
says “Yemen is
at high risk
because its
banks are
highly exposed
to government
debt against
the backdrop
of a weak
fiscal
position and
limited
financing
options.”
Referring to
the demands
for fuel
subsidy cuts,
the IMF report
says “Yemen
“is planning
to increase
non-oil
revenue
collection,
contain the
government
wage bill, and
continue fuel
subsidy
reform.” Is
that still the
case? How
could the IMF
know?
Looking
wider, the IMF
report says
that
“conflicts,
terrorism, and
related
security
disruptions
continue to be
a prevailing
concern in the
region.
Although
airstrikes
have slowed
the advance of
the so-called
Islamic State
(ISIS),
conflicts in
Iraq and Syria
persist,
creating
significant
economic and
political
spillovers for
neighboring
countries
(especially
Jordan and
Lebanon). The
security
situations in
Afghanistan,
Libya,
Pakistan, and
Yemen also
remain
challenging.
Conflicts cast
a shadow over
the economic
outlook for
the MENAP
region, not
only because
they disrupt
economic
activity; they
also reduce
political
space for the
much-needed
reforms and
delay the
return of
confidence to
the MENAP
region.”
On
January 19-20,
the IMF's
Olivier
Blanchard
answered Inner
City Press'
question about
the impact of
falling oil
prices on
Africa by
saying
"Nigeria will
have to
adjust. I do
not know at
this stage
whether they
can adjust on
their own or
they might
need a program
from the Fund.
If they did
any member is
welcome to
come at this
stage I have
no information
about it.”
A
Yemen-like
program?
To the IMF's
World Economic
Outlook Update
press
conference,
Inner City
Press had
submitted this
question:
“Please
summarize what
the decline in
oil prices may
mean for
countries in
Africa, and
what the IMF
is prepared to
do about those
countries
negatively
impacted.”
As the second
online
question
taken, this
question was
put to
Blanchard, who
responded:
“Most
African
countries are
importers and
so are helped.
Some countries
are not and
the main
example is
Nigeria.
Nigeria will
have to
adjust. I do
not know at
this stage
whether they
can adjust on
their own or
they might
need a program
from the Fund.
If they did
any member is
welcome to
come at this
stage I have
no information
about it.”
Earlier on
January 19,
the UN
Security
Council issued
a Presidential
Statement
about, but not
funding, the
fight against
Boko Haram.
Security
Council
sources
leaving the
meeting told
Inner City
Press that for
funding, those
in the region
-- i.e.
Nigeria --
should be
looked to
first.
But if Nigeria
may even need
to apply for
an IMF
program, is it
reasonable for
the powers in
the UN and it
Permanent Five
members of the
Security
Council to
expect it to
be entire
responsible
for fighting
Boko Haram?
We'll have
more on this.
Footnote:
while
Blanchard's
"main example"
was Nigeria,
what about
Angola? What
about
Equatorial
Guinea? To the
north, what
about Libya?
Questions,
questions...
, 
