A WORLD BANK COUNTRY STUDY PUB- 2151 PEOPLE'S DEMOCRATIC Public Disclosure Authorized REPUBLIC OF YEMEN A Review of Economic and Social Development Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized FILECOPY MARCH 1979 PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN A Review of Economic and Social Development This report is based on the findings of a missionto The People's Democratic Republic of Yemen in February/March 1978 consisting of: Shahid A. Chaudhry, chief of mission Abdallah Bouhabib, economist Michel Cretin, planning specialist Elco Greenshields, agricultural consultant The report was discussed with the PDRY government in November 1978. Europe, Middle East and North Africa Regional Office The World Bank Washington, D.C., U.S.A. The World Bank issues country economic studies in two series. This report is a working document and is, as such, part of an informal series based wholly on materials originally prepared for restricted use within the Bank. The text is not meant to be definitive, but is offered so as to make some results of internal research widely available to scholars and practitioners throughout the world. A second, more formal series entitled World Bank Country Economic Reports is published for the Bank by The Johns Hopkins University Press, Baltimore and London. Titles of these and all other Bank publications may be found in the Catalog of Publications, which is available free of charge from World Bank, Publications Unit, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. This report is a free publication. A small charge may be made if airmail postage is required. The views and interpretations in this report are the authors' and should not be attributed to the World Bank, to its affiliated organizations, or to any individual acting in their behalf. Copyright t?i 1979 The International Bank for Reconstruction and Development/The World Bank The World Bank enjoys copyright under Protocol 2 of the Universal Copyright Conven- tion. Nevertheless, reproduction of any part of this report is hereby granted provided that full citation is made. CURRENCY EQUIVALENTS Currency Unit: Yemen dinar (YD) 1 YD - 1,000 fils Currency Equivalents: Before December 1971 YD 1 - US$ 2.40 US$ 1 - YD 0.4167 ,December1971 to February 1973 YD 1 - US$ 2.61 US$ 1 - YD 0.3831 Since February 1973 YD 1 US$ 2.90 US$ 1 - YD 0.3448 NOTE: Fiscal Years were from April 1 to March 31 until 1975. The 1975 fiscal year ended on December 31, 1975--andwas thereforeonly 9 months long. Since 1976 the fiscal year coincideswith the calendar year. TABLE OF CONTENTS Page No. COUNTRY DATA MAP SUMMARY AND CONCLUSIONS I. INTRODUCTION ........................................ I Background to the Report ............................. 1 The Physical Setting ................................. 1 Political and Economic Structure Before 1967 1......... The Economy at Independence (1967) ................... 2 Socio-Economic Objectives and Institutional Changes .. 3 Major Achievements ................................... 5 Outstanding Issues ................................... 6 II. AN ASSESSMENT OF MACRO-ECONOMIC DEVELOPMENT........... 9 Growth of the Public Sector .......................... 9 Development Programs ................................. 10 Growth of National Income and Composition of Domestic Expenditures .............................. 12 The Public Finances .................................. 15 The Balance of Payments .............................. 20 III. AN ASSESSMENT OF SECTOR DEVELOPMENT ................... 26 Sectoral Performance - An Overview ................... 26 Plant Agriculture and Livestock ...................... 27 Fisheries ............................................ 30 Manufacturing and Mineral Resources .... .............. 34 Aden Refinery ........................................ 35 Transport and Communications ......................... 37 Aden Port ....... 38 IV. AN ASSESSMENT OF SOCIAL DEVELOPMENT .... .............. 40 Income Distribution .................................. 41 Regional Disparities ................................. 41 Employment and Emigration ............................ 43 Food and Nutrition ................................... 44 Health ............................................... 46 Education ............................................ 47 Housing .............................................. 51 V. POSSIBLE DIRECTIONS OF FUTURE POLICY AND DEVELOPMENT PROSPECTS .............................. 53 ANNEX - PLANNING PROCEDURES AND PUBLIC ADMINISTRATION 57 STATISTICAL APPENDIX 76 PDRY: COUNTRYDATA AREA 1POPULATION DENSITY 337,800 sq. km 1.7 million (mid-1977) 5.1 per sq. km Rate of Growth: 2.61 (from 1973 to 1977) POPULATION CHARACTERISTICS (1977) HEALTH (1977) Crude Birth Rate (per 1,000) 49.6 Population per physician 8,100 Crude Death Rate (per 1,000) 20.6 Population per hospital bed 810 ACCESS TO PIPED WATER (1977) ACCESS TO ELECTRICITY (1975) Occupied dwellings without 7. of Population - total 22 piped water (%) 77 - rural 1.6 NUTRITION (1977) EDUCATION (1976) Calorie intake as % of requirements sO Adult literacy ra te () 32 Per capita protein intake (grams/day) 58 Primary school enrollment (%) 89 GNP PER CAPITA IN 1977: 1/ $320 NATIONALACCOUNTS GROSSDOHZSTIC PRODUCT IN 1976~ilGrwh(~ (market prices) IG 1976 1976 US$ million - US$ Million 1970/7 197/77ei_ GNP at Market Prices 470 100 GDP at factor cost 0- 326 7 Gross Domestic Investment 148 31 of which Gross National Savings 52 11 Agriculture & fishing 71 22 - 4 Exports of Goods, NiS 92 20 Industry9 / 27 8 -10 -2 imports of Goods, NFS 283 60 Trade, Transport, Finance 117 36 -6 7 Other Services il1 34 5 5 GOVNMENT FINANCE Plrelim. Est. 1974/75 1 1975 1976 1977 -- i-nY.DM.illionsusYemeni eDnar ---- Total receipts 24 17 32 40 Current expenditures 28 25 39 45 Revenue deficit -4 -8 -7 -s Developient expenditures 21 19 39 57 overall deficit -25 -27 -46 -62 Borrowing from Banking System 12 10 17 18 Other Assets and Accounts. 2 1 External financing 13 15 28 43 MONEY.CREDIT AND PRICES 1973 1974 1975 1976 1977 (million Y.D. Ouitsotandingend Period) Money and quasi-money 49 55 67 98 140 Bank credit to government 17 24 3 62 73 Bank credit to non-Gov't. sector!/ 10 19 24 31 49 1/ The per capita GNP estimate calculated by the same conversion technique as the World Bank Atlas. All other conversions to dollars in the table are at the average exchange prevailing during the period covered. 2/Rough estimate. 3/ Includes petroleum refining. 7/ The overall negligible growth of the industrial sector is due to the decline in Aden Refinery production from 6.2 million tons in 1969 to 2.8 million tons in 1973 and 1.6 million tons in 1976--the non-petroleum industrial sector grew at an estisated rate of about 15 percent per annum between 1973-76. 5/ The fiscalyear was April 1-March 31 until March 31, 1975 when it became April 1-Dec. 31, 1975 and thereafter is on a calender year basis. 6/ includes current and development revenues anLd self-financing of public enterprises. 7/Net operationisof special funds (Price Stabilization fund, etc.). 8/Includes public sector agencies. Basic Data Sheet page 2 of 2 BALANCE OF PAYMENTS (US$ million) 1973 1974 1975 1976 1977 Domestic Exports, f.o.b. 1/ 14 8 8 26 29 Retained Imports, c.i.f. 1/ -120 -174 -165 -267 -324 Trade Deficit -106 -166 -157 -241 -295 Invisibles, net 54 70 76 145 205 Workers' Remittances 33 41 56 115 180 Others, net 21 29 20 30 25 Balance on Goods and Services -52 -96 -81 -95 -90 Official Transfers .. 1 10 46 55 Official M & LT Capital, net 25 48 31 58 , 68 Gross Disbursement 25 48 32 60 69 Repayments 2/ - -1 -2 -1 Miscellaneous Capital, net - 23 12. 16 -21 7 Overall Balance -4 -35 -24 -13 40 Net Foreign Assets, of Which: 74 39 15 2 42 Bank of Yemen's gross reserves 76 63 53 82 96 Use of IMF Credit .. -11 -28 -44 -44 Commercial Bank -2 -13 -10 -36 -10 MERCHANDISEEXPORTS Average 1976-77 US$ Million Percent Fish & Fish Products 14.5 53 Cotton 7.0 25 Others 6.0 22 TOTAL. 27.5 100 EXTERNAL DEBT (DECEMBER 31, 1977) US$ Million External Public Debt Outstanding 431.5 Of which: Disbursed 240.7 Debt Service Payments 1977 1.5 Ratio of Debt Service to 1977 Exports of Goods and Services, Including Remittances 0.6 percent RATE OF EXCHANGE Prior to December 1971 As of December 1971 As of February 1973 US$1.00 = YD 0.42 US$1.00 - YD 0.38 US$1.00 - 0.34 YD 1.00 - US$2.40 YD 1.00 - US$2.61 YD 1.00 - US$2.90 1/ Net of re-exports 2/ Including errors and omissions December 28, 1978 _ __ _ _ d _ 18R D -1387L __~r~ ~ _B _ _ 50 OCTOBER19 TURKEY U.USSF. 46, 48a ' IRAN 1 A AB A0 -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 DEMOCRATICREPUBLIC OFPEOPLEYEMEN S f f Stf IARABIA SUDAN g US i>,. ARABIAN SEAo501Of 0 o0 100 I2 O 2\ rWo,Jdd Mst00?400&yf0O KILOMETERS I0 )0tSoooo OUW.Mof0,00 sd1 ohf \ I h,0) shw300)00 jOdrfrfS0bd' .0 Sod #0- 50MdOzf - - .. OMAN /S~~~~~~~~~~~~ S \/ ~~~~~~~Thaxmud vf \ g I t Tt / >\) ~~~~~~~~~~~j <\\50 dttst. \ Y / / ~~~~~~. oBir Tamis z,6/i ARAB -Ghoydah~~~~~~)0 .' Hourof >\ +, \~~ , Q ~ shno'~~~~~ 2\\ _ _ / wMorib // / Zam,,,i, - ~ ~ 000N0040400003.oco,0Y ENm# 0 /Al'A6r Nu Ghail,~~~~~~~~~~~~~~~~~~~~~~~*I-hyd AtA 'o"Wasit B~~~~~~~~OrmOlbt X g \ MSANA!A/ XOShubwah/ :Lt JI § SBicgAl Hibsusaytr (~~~~~~~~~~~~iitJfiyah 1l PRIMARY ROADS THodeido\, AlAn nN*sc u or L{'Nu{ 00Rr Jahiliyahr Khtmer yan CONSTRUCTION As SI z N Burum Al MukOlla ROADSUNDER -144t \ g vukyrus/ I gab<>eiffah.MAINTRACKS~~~~~~~~~~~~~-(24 - - - - - MA I T R C K MrukoydS (D GOVERNORATECAPITALS 7-O Lcowdor / ' Bir Ali //v~ AGRICULTURAL AREAS Baq9/Dhola?,<>sO°Banl Am A n wa Of {WadiSabib . -- INTERNATIONAL AIRPORT Al.Q aral, " Ahwor \ J ~~~~~~TaiztMsymirUS , 'B. ~~ Nobot~~~~~~~~~~~~~~ .~~~~~~~ HARBOR ~~ HR0 Ke D uki .AIH'(SShuqrah Mocha AND NUMBERS * , -AmForsh o U / OF G DLuahIlV 5F. GOVERNORATEBOUNDARIES k(\\Xhur I O ° /%K3tib-r INTERNATIONAL BOUNDARIES ('Albaha Al Fajrah l ADEN 50 52 _Kh.rUMq _aRjg OEN 46° 48° SUMMARY AND CONCLUSIONS Introduction i. Resource Base. PDRY (population 1.7 million) is one of the least- developed countries in the world with a 1977 per capita income estimated at $320 (World Bank Atlas Methodology).