Speeches & Transcripts

The Third Ministerial Meeting of the Friends of Yemen - Speech by Inger Andersen

May 23, 2012

Inger Andersen, Vice President of the Middle East and North Africa region Riyadh, Saudi Arabia

As Prepared for Delivery

Allow me first to express my sincere condolences to the Government and the People of Yemen for the terrible and tragic loss of life in Monday’s attack.  We want to assure the people of Yemen that the donor community including the World Bank will continue to support the development aspirations of the Yemeni people.

Allow me also to use this opportunity to thank the Government of Saudi Arabia for the gracious welcome and wonderful arrangements that they have made for this important meeting.  I would of course also like to express our appreciation to the Governments of Yemen and the UK for all the work that they have done, together with Saudi Arabia, in preparation for this meeting.

I have just been to Yemen.  I was able to meet with the President of the Republic, the Prime Minister, the Minister of Planning and International Cooperation and Minister of Finance and many other senior decision makers, as well as with civil society leaders.  I witnessed firsthand the seriousness of their resolve to move forward on rebuilding the social contract between the state and the people of Yemen.

Yemen’s challenges are many. From the perspective of an economic development institution such as the World Bank, we particularly note the following:

  • 55% of the population live in poverty;
  • 60% of the young adult population is unemployed;
  • 85% of exports and 65% of fiscal revenues are derived from the hydrocarbon sector making the economy highly hydro carbon dependent;
  • 10 million people – 45% of the population – are food insecure;
  • 61% of the children are malnourished; and
  • 56% of the female population is illiterate.

The 2011 protests demanded better governance, an end to corruption, greater voice, economic opportunities and jobs.  The transition provides a window of opportunity but needs to be viewed in the context of challenges on the security, economic and social fronts.

As Yemen takes action to attain peace and security, Yemen will need exceptional, special and substantial support, both financial and technical, in the coming years, and extraordinary and exceptional efforts will be required from both the Government and the donor community. The donor community will have to do its share, and the government of Yemen will have to do its share, too.

Allow me to mention a few of the main findings of the recently completed Economic Social Assessment, jointly undertaken by the EU, ISDB, UN and WB, which stressed the need to:

  • Help the government fill the budget deficit, currently estimated at $2billion (5% of GDP);
  • Support recovery, reconciliation and peace building efforts, create jobs, restore basic services to avoid a humanitarian crisis, address grievances and support the transition.

We welcome the generous oil grants provided by the GCC countries as well as the IMF Rapid Credit Facility ($100 million). We recognize that much more needs to be done to restore macroeconomic stability. 

I call upon the donors to increase their contributions to budget support, including oil grants and indirect contributions through the Social Welfare Fund that protects the poorest.

For quick disbursing and job creating programs, we call on donors to scale up their support to the Social Fund and the Public Works Program.

On the Government side, we call upon the Government to protect its oil and gas pipelines. The stoppage of oil and gas supply causes hundreds of millions of losses to the budget and to the economy per month. We also call upon the Government to focus public spending on infrastructure and protecting the poor.

The Government of Yemen is determined to improve governance, public sector management and institutional capacity.  With UNDP’s leadership, we are working to support the Government with advisors on economic management and related issues.

In particular, the Government has committed itself to strengthening transparency and accountability and to reduce the gap between the laws on the books and what happens on the ground; consulting civil society; improving the delivery of basic services at the local level; reforming the civil service; managing its public expenditures more effectively and with greater transparency; creating a more transparent business environment and reducing “red tape” for investors.

The challenge is immense.  To bring growth above pre-crisis levels (around 4%) to levels around 6-7%, it is estimated that Yemen will need at least $2 billion in external financing annually. Under this scenario, poverty could retreat to 31 percent of the population by 2020.

Turning now to the World Bank Group’s contribution to this effort:

  • The Bank currently has 21 IDA active projects accounting for over $ 850 million in commitments, of which over $500 million remains undisbursed;
  • At this time, we are realigning our program to support the transition government’s priorities.  Accordingly, the Bank program is preparing an Interim Program to support and accompany the Transition Government. We will commit a total of $400 million during the coming 24 months. We are discussing with the Government the priorities for these resources.  Possible areas of support include SMEs, access to finance, local service delivery (water, power, etc), education, etc.
  • Of these $400 million, we are pleased to be signing today the grant agreement for the Labor Intensive Public Works Project ($61 million).  This project will create short term jobs and improve access to basic infrastructure.

Together with the Government of Yemen, we are now preparing for the donors meeting in June.  We are delighted to learn that the Kingdom of Saudi Arabia has generously offered to host the event. The World Bank will work closely with all partners to help make this meeting successful.

Let me close where I began.  This is an extraordinary time for Yemen and it calls for exceptional and extraordinary measures.   Yemen has begun an historic political transition.  With the government’s leadership on reform and sound economic management, donors can help Yemen deliver an economic transition.   We are seeing will and a commitment by the Government to make such reforms. Political and economic transition must proceed hand in hand. This is a transition that must succeed. We, the donors, must do our share.

Thank you.