REPORT

On

EXCHANGE RATES, COUNTRY

SPECIFIC SHOCKS & GOLD: A CASE OF INDIA

By

Shreya Paul
Aditya Purkayastha

BBE Class of 2023

Under the Supervision of

DR. NEERU SIDANA

Amity School of Economics

In Partial Fulfilment of the Requirements for the Degree of

Bachelor of Business Economics
At

AMITY SCHOOL OF ECONOMICS

AMITY UNIVERSITY UTTAR PRADESH
SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA

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 ACKNOWLEDGMENT
We would like to express our gratitude to Amity University, Uttar Pradesh for giving us the
opportunity to work on this report. We would like to thank Neeru Sidana for her guidance
and support throughout the period and for always being a great mentor. We would like to
take this opportunity to express our gratitude to the Amity school of Economics for
providing knowledge and enhancing our skill set in order to complete this report.

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 CONTENTS
CHAPTER 1 4
INTRODUCTION

KEY FEATURES OF THE ECONOMY

PROBLEM OF POVERTY

PRESENT SCENARIO

HOW THE PROBLEM CAN BE SOLVED

CHAPTER 2 8
TRENDS OF POVERTY

CHAPTER 3
12
CAUSES OF POVERTY IN YEMEN

ACTIONS & MEASURES TAKEN

CONCLUSION

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Chapter 1
INTRODUCTON - Economy
Yemen's economy is one of the world's poorest and least developed. Although the country is
a mixed economy, it still remains highly controlled by the government. The national
economy of Yemen relies largely on oil, about 85% of export earnings and 75% of
government revenue originates from this sector. Yemen highly depends on decreasing income
from their relatively small reserves of oil and gas. Agriculture, the country's second-largest
industry, generates 20% of real GDP and employs more than half of the workforce. A black
economy, mismanagement and the depletion of oil and water resources have been the result
of years of chronic poverty, underdevelopment and minimal access in many parts of the
country to essential services. Yemen's exports have been suspended, the currency's exchange
rate has been pressed, inflation has risen, food and fuel imports have been severely curtailed,
and infrastructure has been seriously damaged as a result of the ongoing war. Due to its low
productive capability and industrial base, the country relies significantly on imported goods
as well as external debt relief and aid to keep its economy afloat. slow GDP growth and
substantial unemployment—have typically been compensated for by remittances sent home
by Yemeni workers. High population increase (about 3% per year) exacerbates the country's
difficulties, resulting in a disproportionate number of young people.
KEY FEATURES OF THE ECONOMY

 Yemen's average yearly per capita income is USD 2,213, putting it in the lower
echelon of low-income nations.
 50% of the population is under the age of 15, this resulted in poorer economic growth
than population growth, worsened fiscal imbalances, and significantly lowered
workers' remittances
 Due to security concerns on the ground, access to food and other critical commodities
such as medical equipment is restricted across the country.
 More than 2.8 million people have been internally displaced since the conflict began,
with 14 million unable to get basic health care.
 Yemen's protracted conflict has resulted in food insecurity for around 17 million
people
 Because the majority of the poor work in the service or agricultural sectors, it's likely
that the economy's performance during the post-reform period has had a positive
impact on poverty rates.
 The performance of Yemen's industrial sector appears to be highly correlated with the
increase in oil revenues.
 The service sector continues to be the country's largest contributor to GDP.
 The success of macroeconomic stabilization has not improved the country's
attractiveness to foreign direct investment, which remains very low and concentrated
in the oil sector.

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  Yemen's commerce structure, though extremely open, is driven by oil exports and
imports of consumer products.

PROBLEM OF POVERTY
According to the UNDP, the economy of Yemen has lost 21 years of potential development.
The economy has shrunk by half since 2015, and more than 80% of Yemenis now live below
the poverty line. Loss of income, depreciation of the Yemeni rial (YER), loss of government
revenue, commercial import restrictions, and rising commodity prices are the most visible
manifestations of this collapse. Yemen's economic stability is largely dependent on food and
imports. As a result, without international intervention, the economy has been unable to
recover quickly. A drop in asset availability left those people without jobs and unable to
contribute to a boost in the economy that would feed, clothe, and put money in the hands of
the poor. Rural households obtain their income from a variety of rural and urban economy
sources. The street merchants are widespread, and a major part of the commerce remains
unreported. Yemen's streets are dotted with small stores with minimal specialization and the
same inventory.
PRESENT SCENARIO
Without a political agreement, violations of international humanitarian law (IHL) and
international human rights law (IHRL) are likely to continue, resulting in civilian casualties
and damage to critical infrastructure such as hospitals, schools, main supply routes, and
economic markets. Increased violence and macro-economic fragmentation have put further
stress on weak economic conditions, with people risking hunger in 2021. With 20.1 million
people – over two-thirds of the population – seeking food aid in early 2020, the country is
witnessing the world's worst food security catastrophe. Currency depreciation, trade
disruptions, rising food prices, acute fuel supply shortages, and interruption and reduction of
humanitarian activities are all contributing to rapidly deteriorating socio-economic
conditions. The economy shrank dramatically from a low starting point. Low global oil prices
harmed the oil sector, which is the country's only significant export earner. The COVID-19-
related trade slowdown, as well as extraordinarily high rains that caused severe floods,
damage, and loss of life, had a considerable impact on non-oil economic activity. With the
approaching depletion of the basic import credit facility in Saudi Arabia, foreign exchange
deficits grew further, oil income decreased, and humanitarian assistance was restricted.
Waves of currency depreciations have caused an inflationary pressure that have intensified
the humanitarian situation on the Yemeni riyal in 2018 and 2019. Some public sector
employees have not received their full salary on a regular basis, resulting in increased
poverty. It is estimated that more than 40% of Yemeni households have lost their primary
source of income. The exceptional depreciation of the Yemeni rial has lowered household
purchasing power for Yemenis who still have a source of income. Furthermore, 20.5 million
Yemenis do not have access to safe drinking water or sanitation, and 19.9 million do not have
access to basic healthcare. This has led to large epidemics of avoidable diseases, including as
cholera, diphtheria, mesh and Dengue Fever in Yemen during the past few years. Prior to the
crisis, it affected nearly half of Yemen's total population of about 29 million people; now, it

5
affects an estimated three-quarters of the population—71 percent to 78 percent of Yemenis.
Yemen had one of the highest rates of acute malnutrition, with a particularly high toll among
children under the age of five. Over 2.25 million children aged 0 to 59 months, as well as
over a million pregnant and lactating women, are expected to suffer from acute malnutrition
by 2021.
HOW THE PROBLEM CAN BE SOLVED
1. ENDING THE WAR - According to the research done by London School of
Economics, Yemen may be divided into two halves, which would be a sensible
decision. The political dissension that arose quickly after Yemen's unification in 1990
adds to the case for partitioning the country. Yemen has not been able to build a
pluralistic society, with disputes over cohesive nationalism, since its unification.
Partition therefore remains the only option capable of guaranteeing peace and
safeguarding the interests of all conflicting actors. There would be two favorable
results. One of them is defense from Houthi attacks on the Saudi borders and top-class
plants, such as airports and oil refineries. The second is the end to thousands
murdered by Saudi airstrikes. It would eliminate the blockage and soon would follow
foreign aid. The division of Yemen could thus prove to be the critical step towards
peace in an area otherwise volatile, both internally and regionally.

2. KEEPING PUBLIC SECTOR WORKERS SALARIED - Paying salaries is a critical

component of keeping services running in Yemen today. Much of Yemen's hardship
arises from the collapse of buying power, as a result of the private sector's weakening
and incapacity to pay civil officials' wages. It is clear that doctors, health care
professionals, water engineers and teachers stop working without compensation after
prolonged intervals which disrupts vital maintenance, closes services and encourages
a war economy.

3. OPENING PORTS AND CROSSINGS - By opening ports and crossings, there can
be an increase in supply and lowered costs of basic commodities. Even if the battle in
Hudaydah and its environs worsens, the UN and the Saudi-led coalition should seek to
maintain both ports operational. If they desire to ensure a continuous and predictable
supply of food, medicine, and fuel into their areas of control, Houthi militia
authorities who control the port and other metropolitan centers can negotiate a
handover of the port to third-party monitors.

4. FACILITATION OF PRIVATE SECTOR TRADE - Nearly all basic commodities in

Yemen are provided by private sector dealers, humanitarian aid constituting less than
5% of the total commodities. The Hadi government can set up a trade facilitation
letters for a wide inclusive range of traders to import basic commodities and
pharmaceuticals through the Ministry of Finance and the commercial banking sector.
International banking access would make it possible for global suppliers to evaluate
Yemen's trade risk and reduce the cost of ending buyers. In order to limit a black
economy risk, improved import efficiency and reduced transport costs, very simple
technologies may now be developed in Aden (and finally other ports) in order to
launch automated and transparent customs systems, electronic paid and audited

6
 accounting at Aden port. The Hadi government may easily reduce all taxes and levies
on all basic goods, in light of the emergency characteristics of the humanitarian issue,
by directly reducing costs and increasing commerce. The big private sector actors
should promote a market economy that is open to small and medium-sized firms, as
well as assist in the development of a responsible market system that is not just
extractive, oligarchical, and corrupt. There are economic prospects for innovators and
entrepreneurs in the renewable energy field, as well as in offering support services to
donors and UN agencies, such as data analytics.

5. INCREASING HOUSEHOLD INCOME – the government can stabilize the

currency and to decrease additional non-trade restrictions that hinder families'
capacity to buy goods.

6. CENTRAL BANK’S ROLE - The CBY (Central Bank of Yemen) must be intimately
involved in completing its diagnosis and bringing the Central bank back into the
international banking system with the International Monetary Fund. In order to
facilitate money flows from the relevant banking ties, the CBY should institute the
usage of electronic payments and/or controls through the banking system. In addition
to a commercial facilitation credit system, the Central Bank can re-establish more
wide-ranging viability of a letter of credit in the private sector so that even small
traders can purchase and sell local economies in order to encourage them.

7. THE GOVERNMENT - A budget and an accounting system must be put in place for
the Hadi government to clarify the usage of oil resources and stop the flow of
unexplored leaks fueled by fighting. The humanitarian catastrophe will be stemmed
from a great deal of clarity and better utilization of government resources — specially
to help pay salaries for the health professionals and the teachers. The UN and its
donors would be encouraged to help subsidize these payments through the Ministry of
Finance and the Central Bank with transparent and trustworthy budgets and
accounting schemes. The UN may result in the development of a parallel funding
structure, which would only undermine the credibility of national Yemeni institutions,
if the basic budgeting and accounting are not carried out.

8. ROLE OF THE UN - The UN-led humanitarian community, supported by donors,

must buy as many local products and services as possible from Yemen's markets. This
includes milled and strengthened meal locally, high caloric date bars for school meals
and local services. The United Nations can also do more to set up the processes and
employ suitable technologies to prevent leakage and ensure the aid reaches the most
vulnerable on a need’s basis.

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CHAPTER 2
TRENDS OF POVERTY
Yemen is placed 154th out of 187 countries, placing it among the world's least developed
nations. At the national level, 59.7% of the population is considered poor. According to
statistics, the war has resulted in the impoverishment of 11.7 million people. Furthermore, 4.9
million people are malnourished. 600,000 of these are youngsters under the age of five. The
war also cost Yemen $88.8 billion in economic growth, according to the research. Yemen's
unemployment rate peaked at 35 percent in 1998, while the US jobless rate was only 4.2
percent in 1999. According to the UNDP's Multidimensional Poverty Index, almost 52% of
Yemenis were poor in 2011. Yemen has a poverty rate of 45 percent in 2014. By the end of
2019, the number should have risen to 75 percent. Yemen will become the world’s most
impoverished country by 2022. By 2022, the country plans to live in poverty with 15.8
million Yemenis impoverished. Almost 40% of the population lived under extreme poverty in
1998, that is to say below the lower poverty level. The poverty rate of the headcount
decreased to 34.8% by 2006. While this is a considerable reduction, poverty in rural areas has
been addressed significantly slower (by 2.4 percent only). In metropolitan regions, the poorer
portions had a proportionately higher rate of unemployment. They have seen a higher
decrease in their numbers than the near poor, and the dynamics of poverty reduction in rural
regions have tended to benefit the near poor more than the poor. The National Poverty Survey
(NPS 99) findings say more than 58% of the population is in homes which are poor or
extremely poor. The situation of mass poverty in Yemen is also highlighted by non-income
poverty indicators, such as medical and educational indicators which are near to income
poverty. Based on statistics from the 2005-2006 household survey, HPI values calculated
reveal that 52% of the national population can be regarded as living with human poverty,
with the rate close to 62% in rural areas. The poverty gap ratio decreased from 10.7 in 1998
to 8.9 in 2006. This was accompanied by a drop in the severity and depth of poverty. During
the same time span, the jobless rate increased from 8% to 16%. Poorer governorates are not
always the same as ones with the greatest unemployment rates, according to subnational
survey statistics. The situation has deteriorated with time (e.g., increased intake of junk food
and qat) with an increase in the percentage of children under the age of five who had a low
weight from 30% in 1992 to 46% in 1997/8 and who remained at this level until 2003.
EXPENDITURE CLASSES CUMULATIVE PERCENTAGE PERCENTAGE OF TOTAL
OF TOTAL EXPENDITURES EXPENDITRUES
BOTTOM 60% 34.47 34.47
MIDDLE 30% 70 35.53
TOP 10% 100 30
TABLE 1 – EXPENDITURE DISTRIBUTION CLASS WISE 2005-2006

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The table above confirms a disproportionately skewed allocation of spending. Despite having
a higher per capita expenditure, urban areas have more disparity than rural areas. The
relevance of traditional types of community maintained social solidarity systems, in which
the more better off segments provide regular support to the poor's consumption, is partly
responsible for the lower levels of inequality observed in more rural locations. In 2008, over
27% of the population was food insecure.

Yemen's Govt. Expenditure 2010-2019

40
35
30
25
20
15
10
5
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

HEALTH EXP % DEFENCE EXP % GDP EXP %

FIGURE 1
The above chart showcases how the govt expenditure has constantly declined over the years
and has reached zero level in terms of health and defence expenditure. There GDP
expenditure has remained in an irregular manner over the decade.
Education is the single factor that has the strongest link to the likelihood of falling into
poverty. Agriculture employees have the highest poverty rates of all occupational groupings.
The poor are not necessarily affected by unemployment because they cannot afford to be
without work or income. Instead, their primary issue is underemployment, low wage rates,
poor working conditions in both the formal and informal sectors, and a lack of insurance and
security. Poor people in Yemen tend to have certain demographic characteristics. Thus,
poverty correlates can be divided into three categories: education, employment, and
demography.
1. EDUCATION & POVERTY - Poverty in both urban and rural areas was greatest,
deeper and more serious for analphabets and people with illiterate households. The
poverty risk (incidence) for analphabets is almost 6 percent higher in urban areas than
in average and less than 1 percent higher in rural areas. This association between
education and poverty is stronger for family heads' educational levels. Poverty
incidence in cities continues to fall, from illiterate household heads (32% poverty
headcount) to very low levels for university and post-university graduates (4 percent).
This demonstrates the importance of human capital accumulation in terms of
individual incomes and poverty protection for households. Households with illiterate
household heads were more likely than the overall population to be impoverished by
more than 5% in rural areas. Education tends to have a greater impact on the non-
income components of welfare, with the percentage of deprived households dropping
from 84 percent for an illiterate head of household to 25 percent for a University
educated head of family in terms of total living standards index. Women are currently
illiterate at a rate of 49 percent. While education continues to have a significant role in

9
 alleviating poverty in urban areas, the income gap between the less and more educated
has shrunk over time, showing a falling return on investment in education. This is due
in part to the nature of Yemen's growth process, which is unable to generate
knowledge-intensive jobs, and in part to the declining quality and relevance of
education, with educated people having less relevant jobs.

2. EMPLOYMENT - The ratio of poor to non-poor unemployment fell in urban regions

but rose in rural areas, which could explain why urban areas performed better in
reducing poverty. The growth was driven by the petroleum sector, which provides low
direct employment and an overloaded service sector, which cannot produce sufficient
jobs to cope with the increase in labour supply. With more than 50 percent of jobs and
the majority of rural poor, the agriculture industry cannot create additional jobs due to
severe capacity restrictions associated to harsh environment conditions. Employment
within the public sector has stagnated once it has been able to absorb overwork. The
'working poor' numbers were increasing, indeed, during this period, the poverty rate
among wage earners in agriculture grew. The latter is compatible with the pattern of
decreasing agricultural labour productivity, which nevertheless has to absorb extra
work without increasing output, on an increased or large scale. The private sector
appears to be the poor's only source of work, as it employs the uneducated and
unskilled, two criteria that define the poor. In rural areas, where major agricultural
enterprises employ local populations, private sector employment was more prominent
(63.9 percent of all employment in rural areas, and 47.4 percent in urban areas).
Urban areas, on the other hand, had the highest proportion of government and public
sector jobs, accounting for 47.9% of total employment. In both urban and rural areas,
the poor are overrepresented in the private sector, with two out of every three poor
employed persons working in this sector in urban areas and three out of every four
poor employed persons working in this sector in rural areas. On average, the poor
work longer hours and days each week, especially in urban areas, yet receive a lesser
wage for their efforts. They earn less money per unit of time worked since poor
people's salaries are roughly 73 percent of non-poor people's wages (71 percent in
urban areas and 74 percent in rural areas).

3. DEMOGRAPHICS - Poverty rates rise in proportion to the size of the household. The
majority of the poor (44.7 percent) live in homes of 10 to 15 persons, while the non-
poor reside in smaller groups, with poverty virtually non-existent in single-person
households. In metropolitan regions, slightly more than a quarter of non-poor
households (26%) had 10-15 people, compared to 45 percent of poor households. In
rural areas, 27.4% of non-poor households have six or less people, whereas only 12.5
percent of poor rural households have six or fewer members, and 78 percent have
seven to fifteen individuals.
To measure poverty, three main indicators are used:
1. Poverty incidence (P0)
2. Poverty gap index (P1)
3. Severity of poverty (P2)
P0 – POVERTY INCIDENCE

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The incidence of poverty (also known as the poverty rate or head-count rate) is the most
widely used standard indicator. People are categorized as poor under this technique if
their consumption spending falls below a poverty line, which is defined as the value of a
commodity basket that includes both basic foodstuffs and non-food items. At the national
level, 18% of the population is classed as poor based on these food poverty levels. Food
insecurity affects 10% of people in cities and 20% of people in rural areas. The incidence
of poverty in Yemen was 41.8 percent in rural regions, 30.8 percent in urban areas, and
45.0 percent in rural areas, according to the lower poverty levels. Yemen's poverty rate is
66.9% at the national level and 69.6% in rural areas and 57.8% in urban areas according
to the higher poverty limits.
P1 – POVERTY GAP INDEX
The poverty gap index assesses the severity of poverty by taking into account both the
number of impoverished individuals and their level of poverty. At the national level, this
measure equals 13.2 percent in Yemen. Rural poverty, on the other hand, looks to be
significantly worse than urban poor (14.7 percent) (at 8.2 percent).
P2 – SEVERITY OF POVERTY
While P1 has obvious benefits for some purposes, such as comparing measures aimed at
the poorest, a ranking of dates, localities, or policies in terms of the P2 should clearly
represent the severity of poverty. It is the ability of this metric to organize distributions
better than alternatives, not the specific number obtained, that makes it useful.
POVERTY FACTS ABOUT YEMEN
1. Yemen's poverty adds to the country's alarmingly high infant mortality rate of 55.4
deaths under the age of five per 1,000 births.
2. Yemen has a population of 25.4 million people, with around 54% of them living in
poverty. To put it another way, 54% of the population lives on less than $2 a day.
3. Almost 18 million Yemenis do not have access to safe drinking water. According to
UNICEF, only about 30% of the population has access to piped drinking water.
4. Yemen's economy continues to be eroded by waves of currency depreciation. As a
result, inflation poses a serious threat to the economy and its customers. It also
worsens the humanitarian situation. Yemen's legal currency, the Yemeni rial, has lost
75% of its value in the last four years.

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CHAPTER 3
CAUSES OF POVERTY IN YEMEN
The absence of essential resources such as water, healthcare, and education is the main
cause of poverty in Yemen. Rural and remote surroundings distance it from the rest of the
region physically, intellectually, economically, and socially. Yemen's poverty dilemma is
linked to the country's violence and chronic hunger, it drove Yemen closer to starvation
and exacerbated the country's poverty. Even among graduates, a shortage of opportunities
has driven young adults to take to the streets, resulting in even more pervasive poverty in
Yemen. Furthermore, the country's infrastructure is severely lacking, with only 15% of
the rural population being connected to the national grid. Transportation is costly, and bad
road networks make travel difficult.
1. The severe water scarcity - Yemen is ranked as the world's fifth most water-stressed
country. Despite the fact that Yemen has a water crisis, about 90% of the country's
water is used for largely unproductive agricultural operations. Sana'a, the capital of
Yemen is expected to run out of water for its residents in the next ten years.
2. On the verge of starvation - Several prominent humanitarian assistance organizations
have warned that 44 percent of the population's food requirements are currently
unmet. Five million Yemeni residents are malnourished and in need of immediate
assistance. The increase in malnourished persons since 2009 was attributed to a rise in
food and fuel prices, as well as political instability, according to the report.
3. Political insecurity persists - Fighting between the Houthi rebels in the north has
continued to wreak havoc on civilians and aggravate poverty. The 2019 UNDP report
examines poverty rates in both conflict and non-conflict scenarios, demonstrating that
Yemen's poverty rate might reduce considerably if the country were to be free of
violence. The war's blockades and airstrikes make it impossible to move supplies
from ports in a consistent manner.

MACROECONOMIC 2018 2019 2020 2021

INDICATORS
GDP GROWTH (%) 0.7 2.1 -5.0 0.5
INFLATION 27.6 10.0 26.0 31.0
(YEARLY AVERAGE
%)
BUDGET BALANCE -7.8 -5.3 -9.0 -6.0
(% GDP)
CURRENT -2.0 -3.9 -6.5 -8.0
ACCOUNT
BALANCE (%GDP)
PUBLIC DEBT (% 74.5 76.5 81.5 80
GDP)

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 TABLE 2

ACTIONS & MEASURES TAKEN

THE GOVERNMENT
The Strategic Vision of the Government of Yemen 2025 is a long-term goal to make the
economy a middle-income country by 2025. It aims to enhance rainfed agriculture, to
increase the use of water, to improve the efficiency of water use, to grow crops such as
coffee, potatoes and vegetables and to monitor khat growing. Investment in research also
includes boosting the fisheries industry's production, quality, and competitiveness through
increased refrigeration, storage and transformation marketing facilities. Yemen and its five-
year development programmes aim to decrease the share of the people living below the
poverty line in the Yemen Strategic Paper for Poverty Reduction. Investments of around
US$6 trillion in public investment have surged in the latest five-year programmes
IFAD’s PROJECTS
1. INVESTMENT PROJECT – FISHERIES: The Economic Opportunities Fund
manages this nationwide project, which covers all nine Maritime Governorates
throughout the Yemeni coasts. It seeks to enhance the economic situation of small
fishermen families by providing the poor men and women in fishing communities
with sustainable and varied economic options. The project participants include small
fishermen, fishermen's groups and disadvantaged households in coastal towns
interested in aquaculture and start-ups.
2. PILOT PROJECT FOR HIGHLAND COMMUNAL RURAL INFRASTRUCTRE:
The aim of the initiative is to improve the living standards in remote mountain
settlements of rural poor people:
 enhancing the role of communities in infrastructure improvement
 Reduce isolation and enhance mobility and market and services access
 institutionalizing the improvement of community access roads within a
national road development framework
 Better access to sustainable supply of potable water for disadvantaged
households.
WORLD BANK
The Country Engagement Strategy for Yemen 2020–2021 of the World Bank Group remains
focused on maintaining basic services and institutions, and supporting the livelihoods of
people and the country's economic recovery potentials. Its aims include institutional
capability, improved service resilience and help for poor and vulnerable Yemeni people
affected by conflict. The policy will also promote quick economic growth through the
creation of temporary employment and private-sector support. The World Bank has granted
Yemen large-scale emergency aid through its concessional arm, IDA. By investing in people
and organizations on which they rely for crucial services, IDA financed $1.81 billion for
emergency measures through a novel cooperation with the UN. The COVID-19 Emergency

13
Response Project of IDA is meant to enhance Yemen's weak public health preparation
infrastructure, including COVID-19 detection, confinement, diagnosis and treatment.

WORLD HEALTH ORGANISATION (WHO)

The World Health Organization (WHO) is currently collaborating with other health partners
in Yemen to ensure continuity of health services. Mobile clinics, for example, serve as
primary healthcare centers in the country's more remote areas. WHO, in collaboration with
Field Medical Foundation, has established mobile clinics in Aden, Lahj, and Hadramout to
treat children aged six months to five years of age.
Apart from this, thirty-one international donors in June donated approximately $1.35 billion
in humanitarian help to Yemen, well under the $2.4 billion that United Nations agencies
needed to maintain all of their operations in Yemen. Martin Griffiths, the UN Special Envoy
for Yemen, has been doing little headway in negotiations between the Houthi army and the
government of Yemen. The International Food Policy Research Institute (IFPRI) provides a
comprehensive analytic framework to analyse a wide variety of questions such as
macroeconomics, trade, infrastructure, agricultural productivity, water, public health, and
social protection through an integrated approach.
CONCLUSION
Yemen's economic growth is contingent on the resolution of Yemen's political conflicts and
efficient state economic management when moving away from oil. The development of
taxation capacity to support necessary government spending is one of the important tasks for
Yemeni state. The government's work on organizing indirect as well as direct taxation will
demand significant efforts, but the government's legitimacy is a critical aspect. If the private
sector and private residents realize that the government works for them, taxation will make
education and organization much easier. The state also needs to focus on building on the
home skills of Yemen. This includes better education, job training and infrastructure
improvement, but above all coordination of employment-oriented investment. Yemen
requires growth which provides new prospects for Yemeni work, not only economic growth.
There must also be a growing private sector in Yemen. The state must, of course, provide
security and a stable and effective regulatory framework, but the private sector must feel a
voice in the new administration. Long-term development requires state-private partnerships
in order to effectively prepare for growth, especially in economic sectors. An investment that
enhances employment will be a top priority in the short future. International efforts should be
directed to supporting Yemeni reconstruction of physical infrastructure, to foster jobs for
Yemenis through the promotion of Yemeni work abroad and workplace training programmes
in Yemen, and to support Yemeni bureaucracy and development in the Yemeni private
sector. Such initiatives can establish trust in the legitimacy and ability of the new
administration to begin to implement wider plans to support economic growth on the basis of
Yemeni domestic capacity in the long term.

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TABLES & FIGURES
TABLE 1 - EXPENDITURE DISTRIBUTION 2005-2006: Source – Arab development challenges
Report Draft 1
TABLE 2 – KEY MACROECONOMIC INDICATORS 2018 – 2021: Source -
https://www.coface.com/Economic-Studies-and-Country-Risks/Yemen
FIGURE 1 - GOVT EXPENDITURE OF YEMEN 2010 – 2019
PUBLICATIONS
Fraz Naqvi, 4th Nov 2019. written by Jack McGinn
https://blogs.lse.ac.uk/mec/2019/11/04/partition-the-only-solution-to-end-yemens-crisis/
Alexander Matheou, 1st Aug 2019

https://www.devex.com/news/opinion-6-actions-to-help-alleviate-the-humanitarian-crisis-
in-yemen-95386

Arab development challenges Report Draft 1

Public Spending & Poverty Reduction in an Oil Based Economy: The Case Of Yemen

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https://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Yemen-OVERVIEW-
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https://fanack.com/yemen/economy-of-yemen/
http://www.xinhuanet.com/english/2021-08/06/c_1310112366.htm
https://www.worldbank.org/en/country/yemen/publication/economic-update-april-2021
https://reliefweb.int/sites/reliefweb.int/files/resources/Yemen_HNO_2021_Final.pdf

https://www.carnegiecouncil.org/publications/articles_papers_reports/yemen-an-
economic-strategy-to-ease-humanitarian-crisis

https://www.worldbank.org/en/country/yemen/overview#2

https://borgenproject.org/tag/poverty-in-yemen/

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https://www.hrw.org/world-report/2021/country-chapters/yemen

https://www.ifpri.org/blog/reducing-poverty-and-hunger-yemen

https://www.ifad.org/documents/38714170/39150184/
Enabling+poor+rural+to+overcome+poverty+in+Yemen.pdf/0b2360c9-68b6-4fb7-bf3b-
8c702fd65569

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