São Paulo – The managing director at the International Monetary Fund (IMF), Christine Lagarde, said in a statement on Wednesday (31) that the Yemeni government has achieved "significant progress" towards economic stability even amidst a transition. Lagarde met with Yemeni President Abd Rabbuh Mansur Hadi, formerly vice president under Ali Abdullah Saleh, elected in February 2012. They discussed the measures needed to promote "strong growth" and create jobs in the Arab country through the "Government’s Transitional Plan".<\/p>\n
In the statement, Lagarde said that Yemen needs to increase spending to promote growth and reduce poverty. She also recommended replacing spending with energy subsidies for programs for income transfers to the poor and infrastructure investments. "At the same time, it is important to continue to improve governance, and to develop the financial sector and preserve its stability, so that the private sector can expand," says the document.<\/p>\n
Lagarde pointed out that President Hadi is committed to increasing revenues from non-oil sector of the country and said the government had already corrected "distortions" in the energy sector with the unification of diesel prices. The statement also called for further donations to Yemen, for the country to ensure the implementation of its budget and the structure of the economy.<\/p>\n
Djibouti has high deficit<\/strong><\/p>\n Also on Wednesday the IMF issued a statement warning that Djibouti should reduce its current account deficit, diversify its economy and reduce poverty and unemployment." The bulk of the population has benefited little from recent economic growth. Forty two per cent of the population lives in extreme poverty and 48% of the labour force is unemployed," said the IMF regarding its latest assessment of the economy, on July 19.<\/p>\n The document notes that Djibouti’s Gross Domestic Product (GDP) rose 4.8% in 2012, as against the previous year, driven by increased flow of Foreign Direct Investment (FDI), port activities, trade with Ethiopia and construction. Inflation fell to 3.7%, but the current account deficit remains high. It reached 12.3% of GDP in 2012, but was not unique.<\/p>\n "Persistent budget deficits raise fiscal sustainability concerns and highlight the need for fiscal reform. A deficit of 2.7% of GDP recorded in 2012 was the result of a shortfall in tax revenues, mainly due to poor revenue collection and delayed dividend payments by some public enterprises," said the IMF, noting, however, that tax collection returned to growth in the first quarter of this year.<\/p>\n *Translated by Mark Ament<\/strong><\/p>\n