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* Govt to assess viability of state-owned companies
* Public sector recruitment frozen
* Special military unit to tackle tax evasion
* Oil drilling costs to be reviewed
* New diesel power plants, upgrades banned
By Martin Dokoupil
DUBAI, July 10 Yemen's president has ordered a
raft of austerity steps, including a review of state-owned
companies' viability and curbs on foreign travel by government
officials, to ease pressure on the impoverished state's
crumbling public finances.
Sanaa has struggled to pay public sector salaries and
finance food and energy imports, which has led to power cuts and
fuel shortages as a fight against al Qaeda militants and other
rebel groups undermines the state budget.
In a statement late on Wednesday, the government described
President Abd-Rabbu Mansour Hadi's belt-tightening package as
Among the measures, recruitment has been frozen for all
state institutions and procurement of cars has been halted.
International travel for senior officials will be restricted,
along with the renting of new offices and expense claims.
"Government officials, including ministers, are to be
limited to a maximum of four overseas trips a year. The maximum
duration of stay during official travel should not exceed five
days," the statement said.
"State officials are no longer permitted to travel first or
business class," it added.
The government did not say how much money it expected to
save with the austerity drive, or elaborate on how it would
conduct its review of state firms' economic viability and when
the results might be seen.
Hadi has been trying to stabilise the country for over two
years, after political and economic turmoil forced his
predecessor to step down. But the state's push against Islamic
militants and rebels has sparked attacks on crude oil pipelines
that are key to obtaining up to 70 percent of state revenues.
Sanaa earned just $671 million from exporting crude oil in
January-May, nearly 40 percent less than in the same period last
year. The central bank's foreign asset reserves have shrunk to
$4.6 billion, the lowest level since end-2011.
The government's statement said it would create a
specialised military unit from its special forces to help combat
tax and customs evasion in a country that is awash with weapons.
"Overlapping agencies currently present at custom inspection
centres will be eliminated and custom valuations and tariffs
will be reformed," the statement said. At the same time, the
finance ministry is to review the tax collection process and
resolve tax debts.
The government did not announce any fresh measures directly
aimed at reducing widespread corruption, which is a major drain
on state funds.
The second-poorest Arab nation after Mauritania is hoping to
secure a long-discussed loan from the International Monetary
Fund that could help unlock more donor funds, which have been
held back by fears of corruption and a lack of progress in
Yemen's finance minister told Reuters in May that the
country was seeking "substantially more" than the $560 million
which the IMF proposed, and that the Fund's board was expected
to finalise the deal in July.
The IMF has pressed Yemen to cut the energy subsidies which
cost it $3.07 billion last year, equivalent to 30 percent of
state revenue and 21 percent of expenditure.
However, reducing subsidies is hard in a country where a
third of the population of 25 million lives on less than $2 a
day, and this week's austerity package did not address
Instead, it said the government would review the cost of
drilling and extracting crude oil to bring it down to global
averages, while the ministries of defence and interior would
work to resolve security problems at production sites.
The president also banned the state-owned Public Electricity
Corp, which operates most of Yemen's power generating capacity
and the national grid, from building new diesel power plants,
leasing them or financing expansion of current ones. The PEC is
to review contracts and seek to lower the cost of purchasing
power for the grid.
"The government must work on expanding gas and coal powered
plants to replace diesel plants. Plans to install and operate
Mareb's Second Gas Powered Station by the end of January 2015
will be expedited," the statement said.