Yemen gas export delay to limit GDP growth
Sanaa, August 21, 2009
Yemen, beset by internal strife and tumbling oil income, expects economic growth of 5 per cent in 2009, with delays to gas exports putting an earlier 7 per cent target beyond reach, a central bank official has said.
Ibrahim al-Nahari, sub-governor for foreign banking operations, told Reuters in an interview that gross domestic product (GDP) had expanded 4.66 per cent last year.
"We were expecting to have a major growth rate because of the introduction of Yemen gas exports, but this has been postponed to the end of the year," he was quote as saying in our sister publication, the Gulf Daily News.
LNG shipments from the $5 billion Yemen LNG project were to have begun in June. Yemen's oil minister said this week he now hoped for a start in the middle of next month.
Al Nahari said gas exports would help boost GDP growth to 7 per cent or 8 per cent next year, and a further stimulus would come from the utilisation of foreign aid pledged at a 2006 donors conference.
Hisham Sharaf, vice-minister for planning and international co-operation, said the unspent funds total $3.2 billion, aside from aid from bilateral donors with existing programmes. He said President Ali Abdullah Saleh had ordered the cabinet to speed up work on projects to be funded from the aid, much of which has been allocated, but very little actually spent.
"It took time for both parties to agree on the projects and finalise the blueprints, but we are expecting in 2010 to see a real implementation rather than mere allocation," Al Nahari said.
He acknowledged that Yemen faced a tough time this year and next because the global economic downturn had hit the price of oil, which accounts for 95 per cent of the country's exports.
Crude export earnings make up 70 per cent to 75 per cent of budget revenue.
Oil revenue dropped 75 per cent to $665 million in the first six months from the same period last year due to the combined impact of lower prices and declining production, Nahari said.
This will push the trade balance into a deficit exceeding $1.5 billion this year, against last year's $148 million surplus. The overall balance of payments will swing into a deficit of $1.7 billion to $2 billion, from a $600 million surplus last year, Al Al Nahari said, adding that this would be financed from external sources. – Reuters