By Moneer Al-Omari
Like the Yemeni government, Yemeni businessmen have not disclosed the
volume of their direct or indirect losses under the current financial
crisis. There have been no official or exact figures about the volume of
financial losses incurred by the world crisis on both sides.
Moreover, there is a disagreement between economists and financial
experts over the effect of the world financial crisis on Yemen. Some see
that the country's economy in particular and banking sector in general
have not been affected, while others see the opposite.
Sana'a University Professor Ahmed Ismail Al-Bawab, also a financial
expert working for the Yemen Bank for Reconstruction and Development,
stated to the Yemen Post that Yemen will never get affected by the
current world crisis, specifically when the country has no investments
outside the country.
Al-Bawab continued that the country was hardly affected by the collapse
of oil prices that rose to record levels by the mid of 2008 ($140) and
fell dramatically later to reach $38 this month, hinting its only effect
was reflected in the 2009 state budget where the government was forced
to cut 50 percent of allocations and expenditures.
He also assured that the effects of the world financial crisis fell
heavily on Gulf countries, particularly Saudi Arabia and United Arab
Emirates, as they have lost over $2 trillion.
However, there have been indirect effects on the banking industry
because the crisis generated fears in customer's hearts, resulting
consequently in recession, as most banks depend on treasury bills to
secure primary liquidity, according to Al-Bawab.
Al-Bawab also denied any losses incurred on welfare, insurance or
pensioners' funds and stated that these funds invest their money inside
the country, primarily because they have no specialized cadre, known as
foreign investment administration, to undertake such investment
activities.
However, economy professor Abdullah Al-A'dhi told the Post earlier that
the current financial crisis across the world, especially in America,
will directly affect the Yemeni economy which is directly dependent and
tied to the U.S. Dollar.
Al-A'dhi continued that the disengagement from the U.S. Dollar could
reduce the direct effects on the country's economy and emphasized that
we should diversify our basket of currencies.
"Yemen will get directly affected by the fall of the U.S. dollar because
the country's exports, mostly oil, are sold in this currency. Any forced
devaluation of the U.S. Dollar will devalue the exports," said Al-A'dhi.
He added that the biggest fault in Yemen is that the country relies
greatly on oil, and any fall in its prices will directly or indirectly
affect other sectors in the country, advising that the country should
diversify its products and exports so that the fall of any commodity
would not affect the overall economy.
Instead, officials mentioned late last year that the current financial
crisis which afflicted the world's major economies, especially America,
left little or no effect on the Yemeni economy because the country has
no stock market, noting that having no strong banking relations with
banks and financial institutions in America and Europe was a bless for
the country.
They further stressed that the current crisis could turn the eyes of
Gulf investors to Yemen as they had suffered huge losses under the
mortgage crisis, adding that it is necessary to invest part of the
country's cash reserves in infrastructure and development projects to
help attract the foreign and Gulf capitals.
A businessman admits losses
Despite the fact that most Yemeni businessmen prefer not to disclose the
volume of their losses due to the current financial crisis that hit the
economies across the globe, an economic source noted that several Yemeni
businessmen and commercial houses were subject to huge financial loses.
The Yemeni businessman Abdullah Ali Al-Sunaidar, running one of the
oldest companies of Yemen and shareholder in several banks and insurance
companies, told the Kuwaiti Al-Siyasah newspaper that Yemeni businessmen
have so far lost over $2 billion.
Though he made some money out of trading in lands, Al-Sunaidar further
revealed that he has lost about 15 percent of his company's assets and
capital, stressing that other businessmen's losses could be larger
especially those having securities and shares in the international
stocks.
He also criticized the Yemeni government for failing to say the truth
about its losses under the current world financial crisis.
"The government with no plain reason hid information which is supposed
to be announced for people so that they can be well aware about any
future economic measures aiming to alleviate the crisis's effects," Al-Sunaidar
said.
Al-Sunaidar criticized what he called the businessmen's Lobby (referring
to those businessmen who started their business during 1994 civil war
and just its aftermath. He noted that these businessmen make up 70
percent of Yemeni businessmen, hinting they started their business as
war traders.
He continued that most of them got rich by winning government tenders
through the connivance of government officials, calling for setting
different conditions and rules that decide upon who is a merchant and
who is a businessman.
Media sources also revealed that several Yemeni businessmen have been
subject to big losses, especially those having securities and shares in
the stock markets of U.S., UAE, Egypt and other countries.
Some Yemeni and foreign companies, particularly those working in
contractions, started to halt their business last month and this move
was prompted by the instability in the financial markets.
Several experts stress that the country's industrial and commercial
sectors were exposed to huge losses and this applies to banking industry
and insurance companies, which are also affected by the increased
activities of pirates in the Gulf of Aden and the Indian Ocean.
New government plans
Yemeni government has announced implementing a detailed plan for the
year 2009 and 2010 seeking to strengthen the Yemeni banking sector so
that it can stand firm in the face of the international competition, the
world financial crisis and the requirements for joining the World Trade
Organization.
According to a report recently issued by the Ministry of Planning and
International Cooperation, the government prepared a comprehensive plan
for monetary policy to be implemented during 2009 and 2010. This policy
will help provide economic stability and enhance further sustainable
economic development as well as controlling inflation.
The report further noted that the plan includes additional measures and
policies which guarantee the improvement of monetary and banking
policies and control the excess money supply.
To face the drop of oil prices, the report pointed out that the
government will work, through the Central Bank of Yemen, to control the
money supply, liberalize the interest rates, diversify and develop the
tools of the foreign exchange market and modernize the internal payments
system along with a review of the current monetary policy. It will work
as well on preventing tax evasion and restructuring the public
expenditure.
Source:
http://www.yemenpost.net/65/Business/20081.htm
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