World Bank cuts support by a third citing slow progress

The government doesn’t expect to face any major setbacks following a recent decision by the World Bank to reduce aid to Yemen by 34 percent, according to Vice Minister of Planning and International Cooperation Yahia al-Mutawakil. Al-Mutawakil’s statement comes in the wake of a recent decision by the global body to decrease financial support to the under-developed country from US $420 million to US $280 million for the period from July 2005 to June 2008. Mustapha Rouis, World Bank country manager in Yemen, attributed the decision to the government’s failure to carry out projects for which the loan had originally been allocated. “There have been mistakes in the implementation of projects, rather than in specific policies,” Rouis said after the announcement. At a press conference last week in the capital, Sana, World Bank Vice President for the Middle East and North Africa Christian Portman cited several reasons for the reduction. These included a failure to meet minimum standards of fiscal transparency and efficiency and a lack of improvement to the national investment environment. Portman also complained that not enough had been done to root out official corruption. He added that national economic indicators remained unsatisfactory, based on a World Bank assessments. In August 2002, the bank adopted its current “Country Assistance Strategy” for Yemen, covering the period from 2003 to 2005. The plan included initiatives aimed at improving governance; augmenting the investment environment; boosting the capacities of the nation’s human capital; and ensuring environmental sustainability. World Bank activities in Yemen currently include 18 projects for which US $191 has been disbursed to date, according to bank figures. Contradicting al-Mutawakil’s confidence, however, one Yemeni official opined that the reduction is expected to have a considerable impact on the national economy. "The World Bank is an important supporter of Yemen,” he noted, insisting on anonymity. “The money that was cut could have been used in several areas.” “What’s more, the image of the country as not working in line with international standards of transparency might encourage other donors to follow suit,” resulting in further reductions of funds by multilateral donor organisations, he told IRIN. Yemen is one of the least developed countries in the world, ranking 148th out of 175 countries on the 2003 UNDP Human Development Index. According to the World Bank, it has a per capita GDP of US $460, while approximately 42 percent of the population lives in poverty.