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| >> Regional Overview >> Yemen Overview | ||||||||||||||||||||||
THE DEVELOPMENT CHALLENGE: Yemen's economic and political development is essential for achieving the key U.S. goal of stability in the Gulf region. Threatened by multiple and severe development challenges, Yemen requires targeted interventions and reforms in order to achieve political and economic stability. Yemen is critical to U.S. counterterrorism interests in the post-September 11th environment, and the United States will work with the Government of Yemen to deal with terrorists on Yemeni soil and to deter terrorists from seeking refuge in or transiting through Yemen.
The maturation of Yemen's democratic government and free-market economy are also in the U.S. interest. As indicated in the State Department's FY 2003 Mission Performance Plan for Yemen, the success of Yemen's democracy will directly influence political development throughout the Middle East. This success relies in large part on a commitment by the U.S. to support Yemen in this transition. USAID will contribute to these efforts by helping with basic healthcare, family planning services, and improved access to education at all levels, particularly for Yemeni women. In 1995, the Government of Yemen (GOY) began to implement ambitious macroeconomic stabilization and structural adjustment programs with primary support and guidance provided by the World Bank and International Monetary Fund, and assisted by a broad range of international donors. The objectives of these programs were to reduce fiscal imbalances and resulting inflation while promoting a basis for economic growth. In 1997, the GOY began to implement medium-term economic reform programs. The objectives of these programs were to establish a permanent basis for accelerated and sustainable non-oil sector growth, reduce unemployment, improve the country's social indicators, strengthen the social safety net, maintain financial stability, and achieve external stability. The reform measures helped improve economic performance. The annual real Gross Domestic Product (GDP) growth rate averaged 4.4% from 1995 to 1999 and rose to 6.5% in 2000. The fiscal deficit declined to an average of 3.3% of GDP for 1995-1999 despite the wide-ranging fluctuations in world oil prices, and in 2000 Yemen posted a substantial budget surplus of 9.4% of GDP. This large surplus resulted from a surge in revenue stemming from a 60% rise in world oil prices. Inflation (consumer price index) declined to single digit levels at 6% by 1997 and 8% in 1999, but reached 10.9% in 2000. Considerable improvements have been seen in the current account. The exchange rate stabilized after October 1995 in the range of Yemen Rials (YR) 124-128 to the dollar, but increased to YR 162 in 2000. Despite the success that the GOY is achieving with its stabilization program, major economic and development challenges remain. The Republic of Yemen is among the 25 poorest and least developed countries in the world. Poverty in Yemen doubled between 1992 and 1998, with the number of households below the "food poverty line" rising from 9% to 17%. By including a broader range of minimum human requirements in the poverty line measurement, the percentage of households living in poverty rose from 19% to 33% over the same period. Poverty is becoming more widespread among Yemen's 18.3 million people. Yemen's real GDP per capita is around US$300, and illiteracy and infant mortality rates are among the highest in the world. Illiteracy is particularly high among women and girls-with 74% of females and 44% of males illiterate-although Yemeni women benefit from universal suffrage. Average life expectancy is 53 years. Persistent poverty in Yemen has contributed to its fertility rate of 6.4 children per mother, one of the highest in the world, and a resulting population growth rate of 3% per year. Extremely weak social and economic services and institutions have left Yemen's population underserved in these areas. THE USAID PROGRAM: USAID intends to devote $5 million in FY 2002 and is requesting $10 million in FY 2003. USAID completed the preliminary design of its new Yemen program in FY 2001 that encompasses health and education activities, in support of integrated community development at the district level. In FY 2001, $3.991 million was allocated for Yemen. Of this amount, $1.995 million was budgeted for this new program, with the remaining $1.996 million budgeted for a scholarship program administered by the U.S. Department of State's Bureau for Educational and Cultural Affairs. The funds appropriated in FY 2001 were made available to USAID in December 2001. USAID is now requesting proposals from international nongovernmental organizations to implement the new health and education programs. In FY 2003, USAID intends to continue and expand its health and education activities to serve a greater number of communities in Yemen. Resources may also be used to fund program monitors. ONGOING PROGRAMS FOR WHICH NO FY 2002 OR FY 2003 FUNDING IS REQUESTED: None. OTHER PROGRAM ELEMENTS: In addition to the Asia and Near East Bureau's program, USAID's Bureaus for Global Health and Democracy, Conflict and Humanitarian Assistance implement several activities in Yemen:
Through the 416(b) food aid program, the United States provided approximately 160,000 tons of surplus agricultural commodities in FY 2001 with the monetary equivalent of approximately $34.4 million. OTHER DONORS: The overwhelming majority of donor support goes to water management and social sector programs. All major donors recognize the importance of water management, health, and education (particularly girls' education). The World Bank is the largest donor, focusing on 1) public sector management, including civil service reform, budget reform and privatization; 2) attracting diversified private investment; 3) water management; and 4) poverty-oriented social sector improvements, particularly basic education for girls. Other donors with large programs are Japan (democracy, debt relief, agriculture, education, health, rural water, and fisheries); the Netherlands (water, health, agriculture, environment, gender, and cultural heritage); and Germany (water, sanitation and solid waste management, health, education and training, microenterprise, and good governance). USAID will coordinate its new program with other donors through the Yemen Social Development Fund. Program Data Sheets
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