The World Bank is turning its pledges of support for Yemen into action
In September of last year the international community gathered at two events to discuss support for the economic reconstruction and political transition in Yemen. The end result of the donor conference in Riyadh and the ‘Friends of Yemen’ meeting in New York City was pledges totaling US$7.5 billion. This amount will be enough to cover the budget shortfall in the Government of National Reconciliation’s own reconstruction plan, which is an ambitious effort to deliver urgent services to the neediest, create jobs, and stabilize the economy. Its implementation will be critical for creating an environment that can sustain the political process now underway.
In recognition that commitments only have value if they are fulfilled, the World Bank has begun converting its pledges into action. Three new projects totaling US$206 million in grants from the International Development Agency, the Bank’s arm for the world’s poorest countries, are the first installment of a pledge made at last year’s donor conference of an additional US$400 million in support. We spoke with World Bank Country Manager for Yemen, Wael Zakout about the significance of the new projects and what role the international community can pay in helping create the conditions for a successful political transition in Yemen.
What is the current state of the rebuilding process in Yemen, and what are the greatest challenges?
Wael Zakout: President Abd Rabbuh Mansur al-Hadi just announced March 18th as the date for the start of the National Dialogue. This is a very important step in the transition process. The National Dialogue is expected to last for six months, culminating with the drafting of a new constitution and the holding of presidential and parliamentarian elections. The transition government, with support from donors, has managed to halt the economic contraction caused by the crisis. Central Bank reserves, which had sunk to US$3.7 billion at the height of the crisis, have risen to US$6.2 billion. The economy is expected to grow at a rate of around four percent this year, as compared to zero percent in 2012 and a 19 percent contraction in 2011. The local currency is stable and inflation is under control. The economy, however, has not generated the desperately needed jobs. Poverty, unemployment, and food insecurity are all very high, with some of highest rates in the world.
How important were the pledges made last year in support of Yemen’s reconstruction and political transition?
WZ: The private sector will be the source of job creation and jobs and poverty reduction. But it will take time. In the meantime, it is important the government accelerate the implementation of projects financed by donors to restore confidence, improve services and generate short-term employment. This will give Yemen some room to breathe as it completes the transition period and takes the necessary policy actions and investments to support private sector expansion. In this regard, the government needs to accelerate the establishment of the Fast Track Agency for the absorption of donor funding, and donors need to fulfill their commitment to Yemen by accelerating the delivery of their support.