Yemen citizens suffer due to lifting oil subsidy

By Faisal Darem

Source: Yemen Observer

Economic experts confirmed prices increase on oil derivatives or lifting oil subsidy reflected prices increase on all foodstuffs and commodities, which added economic burdens on citizens.

 Ahmed Saleh, a 35 old years public  employee said “I spend the major of my salary to buy petrol.” He continued saying increasing prices from YR 1500 to 3500 for 20 letters added economic burdens such as prices increase including all foodstuffs as well as transportations prices.

Economic experts warned against lifting oil subsidy which led to catastrophic affects on people as well as on economy.

 Taha al-Fusail an advisor of Ministry of Trade and Industry told YO that the lifting of subsidy oil increase prices of all foodstuffs due to prices increase in transport.

He added that the increase of oil prices led to negative effects on investment projects in general as well as several factories closed due to the increase of oil prices.

Al-Fusail said the government increased prices of oil to combat monopoly and support public budget.

Abdo al-Janadi a deputy of Minister of Information  said that the lifting of the subsidy is a temporary measure and came for combating monopoly, smuggling and to support public budget because the resources of budget decreased and the support of donors stopped.

Al-Janadi stressed that this measure is temporarily measure to support the budget.

Economic experts talked about the manipulation of prices of foodstuffs and transportations, emphasizing the necessity to control the market and to take the required legal action against any manipulators.

They said that the deterioration of the national economy due to price increase of oil and gas which will be reflected directly to the foodstuffs and service prices, which will negatively reflects the average citizens’ standard of living.

The only solution is to create economic policies to promote national economic growth by diversifying income sources for Yemen, specifically within the arenas of non-oil exports and the attraction of foreign investments.

Economists have confirmed that the political crisis which led to decrease the public recourses and increase oil prices to cover the deficit  has affected almost all sectors of the economy negatively.

Economists have also confirmed that  the nation’s economy has been stagnating since widespread anti-government protests started.

In the investment sector, several projects led by Yemeni and Gulf businessmen have been suspended.

Mohammed Hussein, head of the promotion department for the General Authority for Investment, said that the “investment climate must be stable and the value of the currency must be steady for various investment projects to be undertaken”.

“The suspension of projects is temporary and work will resume once the current circumstances end,” he added.

Some analysts, however, expect investment activity to return to previous levels once the situation stabilizes.

He said that the current period will be followed by a transition period to address the imbalance that occurred in the economy.

Prices for goods such as sugar, wheat and rice have increased at varying rates. Fadel Mansour, chairman of the Consumer Protection Association, said that overall prices have increased by 50% due to lifting oil subsidy.

“The situation puts the consumer at risk as long as the crisis continues and the economic wheel stops, which is visible given the halt in construction and investment projects and the releasing of many employees who were working in the private sector,” said Mansour.

He also said that the current situation will “lead to a decline in purchasing power and an increase in the poverty rate, especially food poverty”.

Mansour said that the ministry should tighten control of the markets in light of the monopolies and the manipulation of prices by traders.

“Things will get much worse if the crisis continues,” he said.

Al-Fusail, said that price increases would create many problems, such as local inflation that would exceed the rate of global inflation, which recorded 12% last year and to up to more 30% by the end of this year due to  high prices increase. The government should rely on the free market to import foodstuffs, instead of a cartel of just a few traders.

“Inflation is the main problem for the Yemeni economy, which has negative effects on development in general. So the government is working to achieve monetary stability, al-Fusail said.