central bank of yemen to article (57) of central bank of yemen law, i am pleased to submit ... mr....

CENTRAL BANK OF YEMEN

ANNUAL REPORT

2011

RESEARCH AND STATISTICS GENERAL DEPARTMENT

http://www.centralbank.gov.ye

E-mail:[email protected]

http://www.centralbank.gov.ye/

a

The Speaker – House of Representatives

The Prime Minister

Dear Sirs,

Pursuant to Article (57) of Central Bank of Yemen Law, I am pleased to submit

the Balance Sheet for the year ending on 31st December 2011, Profit and Loss

Account, as certified by the external auditors, and Report of the Board of

Directors on the monetary, credit and economic situation in the country.

Thank you very much.

Mr. Mohamed Awad Bin Humam

Governor

Chairman of Board of Directors

b

Board of Directors

For the year ending on 31st December 2011

Mr. Ahmed A. Rehman Al-Samawi:

Governor and Chairman of the Board of Directors.

Mr. Mohamed Awad Bin Humam:

Deputy Governor and Vice Chairman of the Board of Directors.

Mr. Ahmed Ubaid Al-Fadhli - Vice Minister of Finance Member

Mr. Ali Ali Al-Nouseif Member

Mr. Abdul Gabbar Hayel Saeed Member

Mr. Munassar Saleh Mohammed Al-Quaiti Member

Mr. Abdul Rahman Mohammed Al-Kuhalli Member

c

INDEX

PAGE CONTENTS SUBJECT

1 World and Domestic Economic Developments Chapter One

13 Production Chapter Two

25 Government Finance Chapter Three

35 Money and Credit Chapter Four

11 External Sector Chapter Five

63 Balance Sheet

83 Statistical Appendices

85 Money Supply Appendix 1

86 Changes in Money Supply Appendix 2

87 Balance Sheet of the Central Bank of Yemen Appendix 3

88 Balance Sheet of Commercial Banks Appendix 4

90 Deposits of Commercial Banks Appendix 5

91 Advances of commercial & Islamic banks Appendix 6

93 Interest Rates Appendix 7

94 Currency Issued by Denominations Appendix 8

95 Structure of Banking System Appendix 9

97 Balance of Payments Appendix 10

100 Central Government Finance Appendix 11

102 Gross Domestic Product & Expenditure Appendix 12

103 GDP At Producers Prices By Economic Activity At Current Prices

105 GDP At Producers Prices By Economic Activity At Constant Prices

107 GDP Deflator by Economic Activity

109 GROSS NATIONAL PRODUCT AND PER CAPITA GNP

110 Agricultural Production Appendix 13

116 Consumer Price Indices Appendix 14

117 (a) Market Exchange Rate Appendix 15

118 (b) Exchange Rate of Major Foreign Currencies

120 Trade Balance Appendix 16

121 (a) Exports by sections of H.S. Appendix 17

128 (b) Exports by Country

134 (a) Imports by sections of H.S. Appendix 18

141 (b) Imports by Country

2

I. WORLD ECONOMIC DEVELOPMENTS

Introduction

In 2011 the performance of the world economy weakened as a result of unexpected shocks to which it was exposed thereby registering a modest growth of 3.9%, with variations in the degree of economic slowdown among various countries. In comparison the world economy achieved a strong growth of 5.3% in 2010. The slowdown of global economic growth in 2011 was expected owing to the continued delay of advanced economies in carrying out the structural reform policies necessary to overcome the effects of the international financial crisis.

As mentioned the world economy faced unexpected strong shocks during 2011, which temporarily affected its performance, the most significant of which were the havoc caused by the Tsunami floods and earthquakes in East Japan and the Arab Spring events leading to the overthrow of the political systems in some Middle Eastern countries, resulting in the slackening of industrial production, an increase in oil prices and a fall in its supply.

The negative effects of the shocks referred to above coincided with the

structural problems existing in the advanced economies and the difficulty in agreeing to implement fiscal tightening measures hampering the transfer of demand from the public to the private sector. Furthermore, the prevalence of high unemployment and the worsening of the European debt crisis led to the loss of confidence in international financial markets and the direct sale of high risk assets by investors.

The performance of emerging and developing countries varied at the same time from strong to recovering from the effects of the international financial crisis and as a result of an increase in the prices of primary commodities in some of these economies, or their fall in others, owing to weak external demand for their exports, in addition to political disturbances which afflicted some parts of this group of countries. Generally speaking, however the economic performance was in line with expectations. Following is an outline of the most important international and regional economic developments during the year 2011.

Advanced Economies

During 2011 the pace of economic activity in these countries as a group was weaker than expected, as growth rates are still slow and unemployment

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still high, particularly with the intensification of financial pressures in some Euro area countries and the hesitation shown by the United States authorities in carrying out the required policies. The economies of these countries as a group expanded by 1.6% in 2011, which is half the growth rate achieved in 2010. It is expected to weaken further to a level of 1.4% in 2012, which is too low and insufficient to reduce the prevailing high unemployment significantly.

Inflation is expected to recede from 2.7% in 2011 to 1.9% in 2012 in reflection of the expected fall in international food prices and stagnant wage and labour markets, in view of subdued economic activity resulting from lingering negative effects of the global financial crisis. The challenges and risks still facing these economies necessitate the carrying out of additional policies and measures to reform their financial sectors and public finances, particularly in the United States and Euro Area.

The United States

The growth of the United States’

economy slowed down sharply from a rate of 3% in 2010 to 1.7% in 2011. The slackening of economic activity in the United States was intensified as a result of the earthquakes in

Japan and increasing pressures on domestic demand, owing to the sharp hike in international oil prices, in addition to the deepening of the European debt crisis.

On the other hand, the slowdown in the United States economy was also caused by domestic factors such as the weakening of consumer and investor confidence, as a result of the downgrading of the credit classification of United states sovereign debt and the fall in real estate prices, all of which led to substantial losses in equity market prices.

It is expected that the slowdown in the growth of the US economy, the reduction in job opportunities and wage freeze will limit the fall in the unemployment rate, which averaged a level of 9.0% in 2011. Inflation registered a peak of 3.1% in 2011 and is expected to fall to 2.1% in 2012 as a result of the economy running below full capacity, as well as declining primary commodity prices.

The Euro Area

Growth in the Euro Area economy receded from1.9% in 2010 to 1.5% in 2011, as a result of high fiscal deficits and rising debt levels, which led to market fluctuations and financial

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instability, thereby weakening investor confidence and widening interest rate differentials to unprecedented levels. As a consequence there is a pressing need for the Euro Area to adopt quick and comprehensive measures to reform the financial systems and rectify the imbalances in public finances.

Inflation in the Euro Area is estimated at 2.7% in 2011 and is expected to fall to 2.0% in 2012, as a result of declining primary commodity prices.

Japan

In 2010 the Japanese economy expanded by 4.4% which is a high rate of growth surpassing the era of economic recession, which plagued Japan in previous years, most probably as a result of the adoption of a series of stimulating policies and measures. The Japanese economy, however, shrank by 0.7% in 2011, owing to the disastrous effects of the Tsunami floods and earthquakes which hit east Japan that year leading to a substantial reduction in industrial production. It is worth mentioning that the number of cars manufactured worldwide is estimated to have fallen by 30% during the two months following the Japanese disasters.

Preliminary data indicate the beginning of the recovery of the Japanese economy in the second half of 2011, primarily owing to the implementation of the reconstruction programs. Analysts observe that disturbances in the government bond market are unlikely in the near term, particularly in view of the lack of need for external financing sources, taking into consideration the high surplus in the country’s current account.

However the government should adopt more ambitious policies to tackle the extremely high level of public debt.

Developing and Emerging Countries

Growth in the economies of the developing and emerging countries as a group receded from 7.5% in 2010 to 6.2% in 2011, to a large extent as a result of the slowdown in global demand for primary commodities and the adoption of restrictive policies in some parts of this group of countries.

Generally speaking, these economies have managed to withstand the financial and banking pressures in the advanced countries. Furthermore, these countries are attracting an increasing flow of foreign investments, given the

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slowdown in growth in developed countries. Inflation, on the other hand, accelerated in the developing and emerging countries as a group from 6.1% in 2010 to 7.2% in 2011, owing to the increase in the prices of food and energy, which form a large part of the consumption basket in these countries.

Asian Emerging Markets

Available data indicate that the Asian emerging countries as a group continue to enjoy strong self-supporting growth despite its slowdown from 9.7% in 2010 to 7.8% in 2011, as a result of a decrease in global demand. Growth in the Chinese economy, which is considered the most important one in this group of economies, slowed down from 10.4% in 2010 to 9.2% in 2011 and is expected to fall further to 8% in 2012. In India, on the other hand, growth receded from 10.8% in 2010 to 7.1% in 2011 and it is expected to decline further to 6.1% in 2012.Economic growth in the other Asian group of countries, which includes Indonesia, Malaysia, the Philippines, Thailand and Vietnam, decreased sharply from 10.0% in 2010 to 4.5% in 2011.

The Middle East and North Africa

The economic conditions of this region vary from one country to another. It includes oil rich economies in the Gulf as well as countries with scarce resources relative to their populations. The economic conditions in this region have been affected during most of the last quarter century to a large extent by international oil prices. Economic growth in this region slowed down from 5.0% in 2010 to 3.5% in 2011 but it is expected to strengthen to 5.5% in 2012 in view of the continuing increase in international oil prices, particularly in relation to the Gulf Cooperation Council states, which own 41% of total oil reserves in the world. Increasing international oil prices have strengthened growth in the oil exporting countries which are expected to realize an annual growth rate of 5.0% during the period 2011-2012.

At the same time, increasing international oil prices, which coincided with the political disturbances in a number of countries in the region, have hurt the oil importers. These countries have scarce resources relative to their large populations and achieved as a group a meagre growth rate of 1.5% in 2011, which is its worst performance in the last quarter century.

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6

II. DOMESTIC ECONOMIC DEVELOPMENTS

The Economic Situation in 2011

Based on data received from the

Central Statistical Organization, the

national economy contracted by

15.3% in 2011, mainly as a result of

the political crisis which the country

experienced during the year. By

comparison, the economy achieved

in 2010 a high rate of positive growth

around 6.8%. On the other hand,

non-oil GDP shrank by 14.8% in

2011, after having achieved a

positive growth of 7.2%.

The domestic and external

financing of the budget showed that

the fiscal deficit widened from 5.0%

of GDP in 2010 to 5.5% in 2011,

mainly as a result of a fall in

government non-oil revenues and a

fall in oil production. Meanwhile in

2011, the government’s share of oil

export revenues increased to a large

extent because of soaring

international oil prices, which

averaged US dollars 111.1 during

the year.

The government’s share in oil and gas export revenues increased from YR 569.6 billion in 2010 to YR 787.9 billion in 2011, while total oil and gas

revenues increased from YR 1,090.1 billion in 2010 to YR 1,226.8 billion in 2011. On the other hand, total public debt rose from 38.6 % of GDP in 2010 to 45.6% in 2011.

In the area of money and credit,

despite the negative repercussions

of the events in 2011, the Central

Bank of Yemen was keen to pursue

strict policies, enabling it to maintain

the stability of the exchange rate and

soundness of the banking sector.

The Bank spared no effort to strike a

balance between containing

inflationary pressures while at the

same time stimulating economic

activities. The interest rate on local

currency saving deposits was kept

unchanged at 20% during the year.

Compulsory reserve requirement on

foreign currency deposits was

lowered from 20% in 2010 to 10 %

in 2011and bearing no interest.

Compulsory reserve requirement on

local currency deposits was also

unchanged at 7% and without

interest.

In the same context, the CBY

succeeded in reducing the growth of

broad money supply to only 0.1 % in

2011. Basically domestic liquidity

growth in 2011 was caused by an

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7

increase in net domestic assets and

a decrease in net foreign assets of

the banking system.

In 2011, the Central Bank of Yemen

continued its intervention in the

foreign exchange market, in order to

replenish the market with its needs of

foreign currencies, absorb excess

liquidity, relieve inflationary

pressures in the economy and

maintain exchange rate stability. In

order to reduce foreign exchange

speculation, CBY limited its sales to

banks and for covering basic

commodity imports. In 2011 these

sales amounted to US$ 1,563 million

consisting of US$ 342.6 million

direct sales to banks, US$ 1,188.7

million basic commodity import cover

and US$ 31.9 million direct sales to

public enterprises. The dollar price

stabilized against the national

currency at the rate of 213.8 Rials at

the end of both 2010 and 2011.

Turning to the external sector, the

overall balance of payments deficit

widened from US dollars 905.3

million in 2010 to US dollars 1,398.2

million in 2011, while the current

account deficit also increased from

US dollars1,123.2 million in 2010 to

1,364.3 million in 2011, basically as

a result of an increase in the

services account deficit, which rose

from US dollars 705.8 million in 2010

to 1,066.2 million in 2011. The

capital account, on the other hand,

registered a deficit of dollars 722.2

million in 2011 against a deficit of

dollars 253.1 million the previous

year. Generally speaking, oil and gas

exports have profound effects on the

external accounts positions.

International oil prices kept rising in

2011 averaging dollars 111.3 a

barrel compared with dollars 79.8 in

2010.

By contrast, net foreign reserves of

Central Bank decreased from US

dollars 5,689 million at the end of

2010 to US dollars 4,297 million at

the end of 2011.

Production

Commodity producing sectors

contracted by 14.0 % in 2011

compared with a positive growth of

6.7 % in the previous year, as a

result of the shrinking of the

manufacturing sector by 26.5 % in

2011 compared with a positive

growth of 5.5% in 2010. Likewise,

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8

the extractive industries sector

registered a contraction of 18.6% in


growth of 4% in the previous year.

On the other hand, the electricity,

water and gas sector contracted by

24.9% in 2011 after having achieved

a positive growth of 6.7% in 2010.

The expansion of the Agriculture,

forestry and fisheries sector

weakened from 4.1% in 2010 to

2.8% in 2011. The construction

sector shrank by 24.6% in 2011, after

having achieve a positive growth of

17.2%

Economic activities in the finance,

insurance, housing and business

services sectors receded by 20.7% in


growth of 7.8% in 2010. In the

transport, warehousing and

communication sector, economic

activity receded by 21.6% in 2011

compared with a positive growth of

11.6% in the previous year. On the

other hand, the contraction in

wholesale and retail trade,

restaurants and hotels sectors

amounted to 17.1% in 2011 against

a positive growth of 3.9% in 2010.

Government services growth was

3.8% in 2011 which is the same rate

achieved in 2010.

Total final consumption fell back by

4.6% in 2011 after having expanded

by 13.3% in the previous year, as a

result of a weakening in the growth

rate of private final consumption from

14.4% in 2010 to 6.7% in 2011. On

the other hand, the growth of public

final consumption also slackened

from 7.3% in 2010 to 6.6% in 2011.

Public Finance

Public revenues decreased from

26.4% of GDP in 2010 to 26.0% in

2011, basically as a result of lower

non-oil revenues.Public expenditures

also declined from YR 2,025.2 billion

in 2010 to YR 2,002.6 billion in 2011,

but increased as a percentage of

GDP from 30.1 % in 2010 to 30.8%

in 2011 as a result of the contraction

of GDP in 2011 in both real and

nominal terms. Current expenditures

increased from 26.0% of GDP in

2010 to 28.9% in 2011, while capital

expenditure declined sharply from

4.1% of GDP in 2010 to 1.9% in

2011. The overall fiscal deficit, in

accordance with the financing

classification, increased from 5.0% of

GDP in 2010 to 5.5% in 2011.

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01

External and Domestic Public Debt

Total public debt increased from

38.6% of GDP at the end of 2010 to

45.6% in 2011. Gross domestic

public debt increased in 2011 by

21.5% to what is equivalent to 29.2%

of GDP, while net domestic public

debt amounted to 25.6% of GDP,

after taking into account government

deposits at the Central Bank.

Treasury bills and government bonds

are the main instruments for

borrowing in the primary market.

Treasury bills alone formed 33.7% of

gross domestic public debt. On the

other hand, external public debt

decreased by 1.1% in 2011 and the

total outstanding amount was only

20.0% of GDP. The grant element

amounts to 5.8% of the outstanding

external debt. 53.8% of the total

outstanding external debt is owed to

international finance institutions and

given to Yemen on extremely

concessionary conditions, particularly

the credits extended by IDA, with

long repayment periods and grace

periods of up to ten years.

Money and Credit

By reviewing the components of

domestic liquidity in 2011, we noticed

that M1 increased by YR 207 billion

and currency outside banks by YR

230.6 billion, while demand deposits

decreased by YR 23.7 billion. Quasi

money fell by YR 205 billion as a

result of a decrease of YR 29.6

billion in saving, time, earmarked and

pension fund Rial deposits and YR

175.7 billion in foreign currency

deposits. Currency in circulation

increased from 40% of Rial broad

money in 2010 to 47% in 2011, while

Rial quasi money receded from 47%

of Rial broad money to 40% during

the same period. Foreign currency

deposits contracted from 34% of

broad money in 2010 to 27% at the

end of 2011.

On the other hand, the total of the

balance sheet Central Bank of

Yemen increased slightly by 1.2%

during 2011. In 2011, the balance

sheet total of the conventional and

Islamic banks declined by 8.7%. In

the same year, the net foreign assets

of the banks decreased by 3.4%,

while bank credit to the private sector

declined by16.3%. In 2011, banks

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00

invested 70.2% of their assets in

foreign assets, treasury bills and

Central Bank balances. At the same

time, credit to the private sector

remained at a low rate of 20.8% of

the total assets of banks in 2011.

In 2011, there was a significant

expansion in financial and banking

services. Several new bank branches

and offices were set up in that year

all over the country. In 2011 the

number of ATMs installed in the

country increased by 12.6% to 502

machines, while the number of POS

terminals reached 1901 by the end of

the year. Foreign exchange

companies and bureaux declined in

number to 517 Cheques cleared

decreased to 493,900 representing a

total amount of YR 1,873 billion in

2011 compared with YR 2,175 billion

in 2010.

Balance of Payments

Preliminary data show that the

deficit in the overall balance of

payments widened from US dollars

905.3 million in 2010 to US dollars

1,398.2 million in 2011. Likewise, the

current account deficit increased

from US dollars 1,123.2 million or

3.7% of GDP in 2010 to US dollars

1,364.3 million or 4.5% of GDP in

2011, partially as a result of the

expansion of the deficits in the

income and services accounts. The

trade balance however registered a

small surplus equivalent to 0.4% of

GDP in 2011, as a result of a rise in

oil export revenues. Net current

transfers increased slightly from

6.9% of GDP in 2010 to 7% in 2011.

Furthermore, the capital account

balance amounted to a deficit of US

dollars 722.2 million dollars in 2011

after having registered a deficit of US

dollars 253.1 million in 2010.

Chabter one

01

2011 2010 2009 Description

Output and Prices

Gross Domestic Product at current prices

6,499.1 6,725.7 5,697.6 Billion rails

30,397.9 30,628.4 28,087.7 Million dollars

24,312 23,584 22,864 population (thousand people)

27,938 29,017 27,007 Gross National product Million

US $

1,149 1,230 1,181 Average per capital income

Change in percent

3.37- 18.04 6.17- Gross Domestic Product at current prices

-15.30 6.79 4.32 Real Gross Domestic Product

14.80- 7.19 5.86 Real non-oil Gross Domestic Product

14.09 10.34 9.87- Gross Domestic Product deflator

19.54 11.17 5.41 CPI (average change)

23.17 12.49 10.98 CPI (end of period change)

111.1 79.8 63.5 Crude oil average export price $/barrel

Public Finance as % of GDP

26.3 26.9 22.9 Total Revenues and grants

18.9 16.2 12.6 Oil and gas revenues

7.1 10.2 9.9 Non oil revenues

0.3 0.5 0.5 Grants

30.8 30.1 30.7 Total Expenditure

28.9 .026 25.9 Current expenditure

1.9 4.1 4.7 Development expenditure

4.8- 4.1- 9.1- Overall balance (cash basis)

5.5 5.0 8.3 Financing

2011 2010 2009 Description

45.6 38.6 38.3 Outstanding Total Public Debt

25.6 19.1 16.8 Domestic Debt, net

.020 19.5 21.5 Foreign debt

3.9 2.7 3.6 External Debt Service as% of exports of Goods & Services

Money and credit (Change in %)

0.2 9.2 10.6 Broad Money Supply (M2)

16.3- 8.5 4.6- Private sector Credit

20 20 10 Benchmark deposit rate (%

per annum)

2.9 3.0 2.7 Velocity of Circulation

Foreign Sector (million US$)

8662.2 7649.8 .05855 Exports (FOB),of which :

7850 6280.4 4432.4 Crude Oil & Gas

8542.5- 8472.9- 7867.8- Imports (FOB )

1483.9- 300.0 - 552.1- Services, income and Transfers (net)

33.8- 253.1 - -312.3 Capital Account including net errors& omissions

1398.2- 905.3- 1289.9- Overall Balance

.54296 5689 6703.5 Central Bank net Foreign Reserves

5.3 7.1 9.0 In months of imports

4.5- 3.7 - 9.1- Current Account as % of GDP

213.8 213.8 207.3 Exchange rate YR/US $ ( end of period )

* Preliminary

Main Economic Indicators

Chabter one

51

The events Yemen experienced in

2011 had serious effects on the

performance of the national economy,

causing substantial damages in all

economic sectors. As a consequence,

gross domestic product at current as

well as constant prices shrank last

year as a result of a slump in

economic activities.

I. GROSS DOMESTIC PRODUCT :

Gross domestic product at constant prices shrank by 15.3% in 2011 after having expanded by 6.8% in 2010. The fall in GDP in 2011 was essentially as a result of a reduction of economic activity in both sectors of manufacturing of commodities and production of services by 14.0% and 16.1% respectively. On the other hand, non-oil GDP at constant prices receded by -14.8% in 2011 after expanding by 7.2% in 2010.

Economic Growth Rates at Current and Constant Prices

(Percentages (

Description *2010 **2011

At Current Prices

gross national product 18.0 -3.4

Non-oil Gross Domestic Product 12.4 -8.4

National Disposable Income 18.7 -5.2

At Constant Prices(100=2000)

National Disposable Income 6.8 -15.3

Non-oil Gross Domestic Product 7.2 -14.8

Source: Central Statistical Organization

* Preliminary

** Preliminary Estimated Figures

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51

II. GDP SECTORS DEVELOPMENTS:

Preliminary estimates of gross domestic product at constant prices for 2011 show that most economic sectors registered negative growth rates. Agriculture, forestry and fisheries grew by 2.8% in 2011, compared with 4.1% in the previous year. With the exception of government services which maintained a growth rate of 3.8% in both 2010 and 2011, the other sectors shrank by different rates, the highest of which was 26.6% in manufacturing, after having achieved a growth rate of 5.5% the previous year. The wholesale and retail trade, restaurants and hotels sector shrank by the lowest rate (17.1%) in 2011 was after having achieved a growth rate of 3.9% the previous year. On the other hand, goods producing sectors as a group shrank by 14.0% in 2011, after having expanded by 6.7% in 2010.

The contribution to GDP of goods producing sectors as a group at constant market prices was 40.5% in 2011 compared with 39.9% in 2010. On the other hand the group of services producing sectors shrank by a rate of 16.1% in 2011 compared

Growth Rates of Economic Sectors at Constant Market Prices

(2000 = 100) (Percentages (

**2011 *2010 Description

2.9 4.1 Agriculture and Fishing

-18.6 4.0 Mining Industries

-26.5 5.5 Manufacturing Industries

-24.9 6.7 Electricity and Water

-24.6 17.2 Construction

-14.0 6.7 Total Commodity Producing Sectors

-17.1 3.9 Trade, Restaurants and Hotels

-21.6 11.566 Transport and Communication

-20.7 7.8 Finance, Real Estate & Business Services

-18.2 3.6 Social and Personal Services

3.8 3.8 Producers of Government Services

-19.6 3.0 Household Sector

-19.6 0.5 Non-Profit Institutions

- 16.1 6.9 Total Services Sectors

-15.3 6.8 GDP at Market Prices


* Actual Preliminary Figures

** Estimated Preliminary Figures

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51

with a growth rate of 6.9% in 2010, while the contribution to GDP of this group of sectors retreated from 59.1% in 2010 to 58.6% in 2011.

DEVELOPMENTS OF GOODS

PRODUCING SECTORS IN 2011

Agriculture, forestry and

fisheries sector

At constant prices, the growth of this sector weakened from 4.1% in 2010 to 2.8% in 2011, but its contribution to GDP at constant prices increased from 12.9% in 2010 to 15.7% in 2011.

Extractive industries sector

At constant market prices, this sector shrank by 18.6% in 2011 compared with a growth of 4.0% in 2010, resulting in a decrease of its contribution to GDP from 13.2% in 2010 to 12.7% in 2011.

Manufacturing Industries Sector


Relative importance of Economic sectors to GDP at constant market prices

(2000 = 100) (Percentages (

**2011 *2010 Description

15.7 12.9 Agriculture and Fishing

12.7 13.2 Mining Industries

4.4 5.1 Manufacturing Industries

0.6 0.7 Electricity and Water

7.1 8.0 Construction

40.5 39.9 Total Commodity Producing Sectors

20.0 20.5 Trade, Restaurants and Hotels

18.1 19.6 Transport and Communication

8.3 8.9 Finance, Real Estate & Business Services

10.7 8.7 Producers of Government Services

14 1.4 Other

58.6 59.1 Total Services Sectors

100 100 GDP at Market Prices


* Actual Preliminary Figures

** Estimated Preliminary Figures

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51

Electricity, water and gas Sector


Construction Sector


DEVELOPMENTS OF SERVICES

PRODUCING SECTORS IN 2011

Wholesale and retail trade,

restaurants and hotels Sector

At constant market prices, wholesale and retail trade and maintenance shrank by 16.1% in 2011 compared with a growth of 3.2% in 2010. At constant market prices, restaurants and hotels shrank by 25.3% in 2011 compared with a growth of 4.2% in 2010. The contribution to GDP of wholesale and retail trade, restaurants, hotels and maintenance fell from 20.5% in 2010 to 20.0% in 2011.

Transport, warehousing and

communications Sector

Transport and warehousing shrank at constant prices by 19.3% in 2011, compared with a growth of 5.5% in 2010, while communications shrank by a rate of 25.6% in 2011, compared with a growth of 24.2% in 2010. The contribution to GDP at constant prices of this sector retreated from 19.6% in 2010 to 18.1% in 2011.

Finance, insurance, real estate

and business services Sector

Finance and insurance shrank at constant prices by 22.6% in 2011, compared with a growth of 13.7% in 2010. Likewise real estates and business services shrank by a rate of 19.6% in 2011, compared with a growth of 4.5% in 2010. The contribution to GDP at constant prices of this sector retreated from 8.9% in 2010 to 8.3% in 2011.

Government Services Sector

Growth of this sector at constant prices in 2011 was 3.8% which was the same rate achieved in 2010. Its contribution to GDP however strengthened from 8.7% in 2010 to 10.7% in 2011.

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51

III. EXPENDITURE ON GROSS

DOMESTIC PRODUCT

Preliminary estimates indicate that expenditure on total consumption at current market prices shrank by 4.6% in 2011, compared with a growth rate of 13.3% in 2010, as a result of a fall in private final consumption of 6.7% in 2011 compared with an expansion of 14.4% in 2010. Consequently its contribution to total expenditure on GDP retreated from 72.9% in 2010 to 70.4% in 2011.

On the other hand, the growth rate of public final consumption at current market prices expanded by 6.7% in 2011, compared with a growth rate of 7.3% in 2010, leading to a rise in its contribution to GDP to 14.6%. The reduction of private consumption by an amount exceeding the increase in public consumption led to a fall in the contribution of final consumption to GDP from 86.0% in 2010 to 84.9% in 2011.

Fixed capital formation decreased by 34.1% in 2011 compared with an increase of 17.7% in 2010, leading to a marked retreat in its contribution to GDP from 20.0% in 2010 to 13.6% in 2011.

Main Indicators of GDP Expenditure Components at Current Market Prices

(Percentages (

2011** 2010*

Rel

ativ

e im

port-

acn

e to

GD

P

Gro

wth

Rat

e

Rel

ativ

e im

port

-acn

e to

GD

P

Gro

wth

Rat

e

Description

84.9 -4.6 86.0 13.3 Final Gross Consumption

14.5 6.6 13.2 7.2 Final Public Consumption

70.4 -6.7 72.8 14.4 Final Private Consumption

16.8 -18.1 19.8 13.8 Gross Investment

13.6 -34.1 20.0 17.7 Gross Fixed Capital

Formation

3.2 1843.5- 0.2- -140.3 Change in Stock

32.6 4.3 30.2 43.2 Exports of goods and

services

34.3- 8.1- 36.07- 21.20 Less imports of goods

and services

100.0 -3.4 100 18.0 GDP at Market Price

Source: Central Statistical Organization * Estimated Preliminary Figures ** Forecast

Chabter tow

02

As far as the external sector is concerned, exports of goods and services expanded by 4.3% in 2011, compared with a growth of 43.2% in 2010, leading to an increase in their contribution to GDP at current market prices from 30.2% in 2010 to 32.6% in 2011.On the other hand, imports of goods and services declined by 8.1% in 2011, compared with an expansion of 21.2% in 2010, thereby leading to a decline in their contribution to GDP at current market prices from 36.1% in 2010 to 34.3% in 2011.

IV. Prices

Average inflation as measured by CPI rose from 11.2% in 2010 to 19.5% in 2011, partially owing to the increase in the prices of tobacco (including cigarettes and qat), transport, housing and food by 54%, 19%, 19% and 15% respectively. On the other hand, preliminary estimates indicate that the GDP deflator increased from 10.5% in 2010 to 14.1% in 2011, while the non-oil GDP deflator rose from 4.6% in 2010 to 7.5% in 2011.

Distribution of investment projects licensed by the general investment authority

(In YR Pillion)

2011 2010

Descri

pti

on

%

Valu

e

% No

%

Valu

e

% No

10.5 19.1 56.7 55 61.5 79.8 53.0 87 Manufacturing

0.1 0.1 2.1 2 2.9 3.8 10.4 17 Agriculture

6.3 11.3 6.2 6 0.0 0.0 0.0 0 Fishery

81.3 147.6 22.7 22 24.3 31.5 16.5 27 Services

1.9 3.4 12.4 12 11.3 14.7 20.1 33 Tourism

100 181.6 100 97 100 129.8 100 164 Total

Source: General investment Authority .

Inflation Rates*

(Percentages ( 2011 2010 Description

Consumer Price Index (annual average)1

19.5 11.2 All-items

14.9 10.5 Core Inflation2

Consumer price Index (end of period)

23.2 12.5 All-items

19.4 10.8 Core Inflation2

14.1 10.5 GDP deflator

7.5 4.8 Non-oil GDP deflator

Source: Central Statistical Organization 1-November 2008=100 2-Excluding Qat

Chabter tow

05

V. Investment

The total number of projects licensed in 2011 by the General Investment Authority in its head office and branches was 97 projects distributed among various sectors with a total value of 181.6 billion Rials, while the fixed assets worth 35 billion Rials, as detailed below:

Out of the total number of projects, 57% were industrial, which was 37% less than what was licensed in 2010. Furthermore the value of industrial projects reached 19 billion Rials in 2011, which was 76% lower than what was achieved in the previous year.

The number of projects in the Services Sector licensed in 2011 was 22 for a total amount of 148 billion Rials, which was 5 projects lower than what was achieved in 2010 but much higher in amount by 368%.

Projects in the tourism industry in 2011 were 12 in number for a total value of 3.4 billion Rials, which were lower than what was achieved in the previous year by 21 projects and 77% in value.

Projects in agriculture licensed in 2011were only 2 in number worth 0.1

billion Rials, compared with 17 projects worth 3.8 billion Rials.

Projects in fishery licensed in 2011 were 6 in number worth 11.3 billion Rials.

VI. Agriculture

In 2011 the area allotted to cereal production declined by 15.4% and as a result cereal production fell by 19.4% compared to the previous year. The area on which vegetables are grown declined in 2011 by 12.7% . Production of vegetables and fruits was lower than 2010 by 15.2% and 4.4% respectively.

Area and Output of Main Agricultural Crops

Growth ( % ) 2011 2010 Agricultural

Crops Area

1 Prod.

2 Area

1 Prod.

2 Area

1 Prod.

2

-15.4 -19.4 784.8 816.5 927.3 1012.9 Cereals

-12.7 -15.2 80.8 988.5 92.6 1165.0 Vegetables

0.0 -4.4 94.0 991.1 94.0 1036.9 Fruits

-7.9 -8.6 45.7 89.8 49.6 98.2 Legumes

-2.1 -7.2 88.8 87.9 90.7 94.7 Cash Crops

1.8 2.4 162.6 180.6 159.7 176.4 Qat

-6.5 -9.4 155.2 1970.5 166 2175.8 Fodder

-10.6 -11.0 1411.9 5125.0 1579.9 5759.9 Total

Source: Ministry of Agriculture 1 Area in Hectares 2 Production in Tons

Chabter tow

00

The area on which legumes is grown decreased by 7.9% in 2011 resulting in a reduction of 8.6% in production. In a similar trend , cash crops were lower by 2.1% in area and 7.2% in production. However, qat increased in 2011 by 1.8% in area and 2.4% in production. Fodder production went down in 2011 by 6.5% in area, which led to a fall of 9.4% in production.

VII. Animal husbandry

In 2011 the number of goats, sheep, cows and camels increased by 1.6%, 1.0%, 3.0% and 8.2% respectively. In the same year, the production of white meat rose by 6.6%,while the quantities of eggs produced increased by 2.5%. The production of hides and skins, wool and honey expanded in 2011 by 2.8%, 3.2% and 0.6% respectively.

VIII. Fisheries

In 2011, fish production decreased in quantity but increased in value. In that year seaside fish production shrank by 4.9% registering a quantity of 127 thousand tons, while its value expanded sharply by 133% to YR 63.6 billion. On the other hand deep sea fish produced shrank by 9.9 % to 18 thousand tons, while its value expanded by 86 % to YR 8.9 bn. Other sea fish production increased in

Number of Animals

2011 2010

Agricultural Crops

Gro

wth

%

Nu

mb

er

(1000)

Gro

wth

%

Nu

mb

er

(1000)

1.6 9,358 1.3 9,206 Goats

1.0 9,106 1.5 9,016 Lamb

3.0 1,654 -2.4 1,605 Cows

8.2 436 5.0 403 Camels

Source : Ministry of Agriculture

Animal Production in Thousands Tons

2011 2010

Agricultural Crops

Gro

wth

%

Nu

mb

er

(10

00

)

Gro

wth

%

Nu

mb

er

(10

00

)

6.6 153,621 3.2 144,103 White meat

2.5 1,195 3.4 1,166 Eggs (millions)

2.8 12,939 4.0 12,586 Hides & skins

3.2 4,366 1.3 4,231 Wool

0.6 2,561 2.4 2546 Honey

Fish and Aquatic Catch (Quantity in Thousand Tons, Growth in

Percent and Value in Million rials)

Growth ( % ) 2011 2010

Agricultural Crops

Value Qty Value Qty Value Qty

133.1% 4.9%- 63576 127 27275 133 Superficies

86.0 -9.9% 8870 18 4768 20 Deep Sea

Fish

21.6% 18.8 6185 12 5087 10 Moll uses & Crustaceans

111.8% -4.0% 78631 157 37130 164 Total

Source: Ministry of Fish Wealth Qty :( thousand tons)

Chabter tow

02

quantity by 18.8 % to 12 thousand tons and its value expanded by 21.6 % to YR 6.2 bn.

IX. Education

In the academic year 2010/2011 the number of students enrolled in public education (elementary and secondary) expanded significantly reaching 5.3 million, 3.1 million of whom were boys and the remaining 2.2 million girls.

In view of rising demand for skilled technical and professional workers, the Government established many technical and vocational institutes and community colleges. The number of students enrolled in these institutes and colleges reached 30,879 in the academic year 2010/2011, distributed over 104 fields of specialization, out of which 26,638 are males and 4,241 females.

The number of students enrolled in public universities reached 203.5 thousands in the academic year 2009/2010, 31.5% of whom were females. On the other hand, the number of students attending private universities was 62.6 thousand, 23.2% of whom were females, reflecting public awareness of the importance of education.

Number of students at various Stages of Education

(In thousands)

2010 /2011 2009 / 2010

Stage To

tal

Fe

ma

le

Ma

le

To

tal

Fe

ma

le

Ma

le

4656 1989 2667 4403 1880 2523 Basic Education

616 233 383 575 212 363 Secondary Education

5272 2222 3050 4978 2091 2886 Total

Source: Ministry of Education

Number of Students Enrolled in Technical Education

2010 /2011 2009 / 2010

Stage To

tal

Fe

ma

le

Ma

le

To

tal

Fe

ma

le

Ma

le

5786 1365 4421 4940 1031 3909 Technical Diploma & Community

Colleges

13368 2291 11077 10981 1934 9047 Technical Diploma (2Years)

3900 492 3408 2970 412 2558 Secondary

Professional Education

7825 93 7732 6925 74 6851 Professional Diploma

30879 4241 26638 25816 3451 22365 Total

Source : Ministry of Technical and Professional Education

Number of Students enrolled in University Education

(In thousands )

(%) 2009 / 2010

Stage

To

tal

Fe

ma

le

Sta

ge

To

tal

Fe

ma

le

Ma

le

100 31.5 68.5 203.5 64.1 139.4 Public Universities

100 28.6 71.4 45.9 13.1 32.8 Science Colleges

100 32.3 67.7 157.5 50.9 106.6 Humanity Colleges

100 23.2 76.8 62.6 14.5 48.1 Private Universities

100 29.5 70.5 266.1 78.6 187.5 Total

Source : Ministry of Higher Education

Chabter tow

72

Domestic and external financing

data for the 2011 budget indicate that

a deficit of YR 360.2 billion or 5.5% of

GDP was realized, compared with a

deficit of YR 334.4 billion or 5.0% of

GDP in 2010.

Public Revenues:

Public revenues decreased by

4.8% from YR 1,774.9 billion in 2010

to YR 1,689.0 billion in 2011. The

decrease was concentrated in non-

oil revenues, comprising of tax and

non-tax revenues, which fell back by

YR 78.5 and YR 144.3 billion

respectively. Oil revenues on the

other hand increased by 12.5% ,

owing to higher international prices.

As a ratio to GDP, pubic revenues

receded from 26.4% in 2010 to

26.0% in 2011.

1. Oil and Gas Revenues:

Oil and gas revenues increased

from YR 1090.1 billion or 16.2% of

GDP in 2010 to YR 1226.8 billion or

18.9% of GDP in 2011. Oil and gas

revenues include crude oil and gas

export and domestic consumption's

oil and gas revenues.

(a) Crude Oil and Gas Exports:

Crude oil and gas exports

expanded from YR 569.6 billion or

8.5% of GDP in 2010 to YR 787.9

billion or 12.1% of GDP in 2011,

basically as a result of the

increase in the average export

price from 79.8 dollars to 111.1

dollars a barrel.

(b) Domestic Oil and Gas

Revenues :

Domestic oil and gas revenues

fell from YR 520.5 billion or 7.7%

of GDP in 2010 to YR 438.9 billion

or 6.8 % of GDP in 2011.

2. Non-oil Revenues:

Non-oil revenues decreased

from YR 684.8 billion in 2010 to YR

462.2 billion in 2011 registering a

ratio to GDP of 7.1% in 2011. Non-

oil revenues include tax and non-

tax revenues.

Chabter three

72

(a) Tax revenues:

Tax revenues decreased from

YR 454.6 billion or 6.8% of GDP

in 2010 to YR 376.1 billion or

5.8% of GDP in 2011. They

include direct and indirect taxes.

Direct taxes fell by 10.3% from YR

219.2 billion in 2010 to YR 196.7

billion in 2011. On the other hand,

indirect taxes, which include

custom duties, receded by 23.8%

from YR 235.4 billion in 2010 to

YR 179.4 billion in 2011.

(b) Non-tax Revenues:

Non tax revenues, which

include fees and profit transfers,

decreased by 62.7% from YR

230.2 billion or 3.4% of GDP in

2010 to YR 86.1 billion or 1.3% of

GDP in 2011.

II. Public Expenditures:

Public expenditures, which include

current and capital expenditures

declined by YR 2,002.6 billion or 1.1%

from YR 2,025.2 billion in 2010 to YR

2,002.6 billion in 2011. However as a

result of GDP reduction in 2011, it

Increased as percentage of GDP from

30.1% to 30.8% in 2011.

Government Revenues

(YR billions)

Items 2010 2011*

Total Revenues and Grants 1809.1 1706.3

Total Revenues 1774.9 1689.0

Oil and Gas Revenues 1090.1 1226.8

Crude Oil Exports 569.6 787.9

Domestic Oil & Gas Revenues 520.5 438.9

Non-oil Revenues 684.8 462.2

Tax Revenues ,of which: 454.6 376.1

Direct Taxes 219.2 196.7

Indirect Taxes 235.4 179.4

Non-tax Revenues 230.2 86.1

Grants 34.2 17.3

Source: Ministry of Finance

* Preliminary

Chabter three

72

1. Current Expenditures

Current expenditures, which

include wages and salaries,

materials, services, interest

obligations, transfers and subsidies,

rose by 7.2% from YR 1,750.1 billion

or 26.0% of GDP in 2010 to YR

1,875.6 billion or 28.9% of GDP in

2011.

(a) Wages and Salaries (Civilian)

Wages and salaries rose by

16.4% from YR 569 billion in 2010 to

YR 662.6 billion in 2011, as a result

of the increase in wages and the

number of newly recruited

government employees.

(b) Materials and Services

Materials and services decreased

by 12.8% from YR 222 billion in 2010

to YR 193.5 billion in 2011.

(C) Interest Obligations

Interest obligations rose by 45.8%

from YR 159.9 billion or 2.4% of


3.6% of GDP in 2011. They include

domestic and external obligations.

As a ratio of total interest obligations,

domestic obligations rose marginally

from 92.7% in 2010 to 93.5% in

2011.

Government Expenditure

(YR billions)

Items 2010 2011*

Total Government Expenditures &

Net Lending 2086.3 2021.5

Total Government Expenditures 2025.2 2002.6

Current Expenditures 1750.1 1875.6

Wages and Salaries(Civilian) 569.0 662.6

Material and Services 222.0 193.5

Interest Obligations 159.9 233.2

Domestic (Net) 148.2 218.1

Foreign 11.8 15.1

Transfers& Subsidies 734.5 712.4

Subsides 564.0 535.1

Current Transfers 170.5 177.3

Other Current Expenditures 32.7 35.7

Capital DevelopmentExpenditures 275.1 127.0

Net Lending 61.0 18.9


*Preliminary

Chabter three

03

(d) Transfers and Subsidies

Transfers and subsidies

decreased by 3% from YR 734.5

billion or 10.9% of GDP in 2010 to

YR 712.4 billion or 11% of GDP in

2011. They include current transfers

and subsidies. Subsidies fell by

5.1% from YR 564 billion or 8.4% of


8.2% of GDP in 2011, mainly owing

to the reduction of the gasoline

subsidy during the year. However,

the subsidy bill still not much

affected because of the increase of

world oil prices and the importation

of a large part of oil consumption by

products from abroad, as a result of

the damage caused to the oil

pipeline. Current transfers rose by

4% from YR 170.5 billion in 2010 to

YR 177.3 billion in 2011.

(e) Other Current Expenditures

Other current expenditures

increased by 9.2% from YR 32.7

billion in 2010 to YR 35.7 billion in

2011, but remained the same as a

ratio of total current expenditures as

it was in 2010 at 1.9%.

Overall Balance of Government Finance

(YR billions)

Items 2010 2011*

Total Public Revenues 1774.9 1689.0

Grants 34.2 17.3

Total Public Expenditures &net

Lending 2086.3 2021.5

Overall Balance

(on commitment basis) -277.2 -315.2

Pending Obligations 0.0 0.0

Overall Balance (on cash basis) 277.2 315.2

Financing 334.4 360.2

External Financing (Net) 23.0 -18.0

Domestic Financing (Net): 311.4 378.2

Banking System 247.5 311.9

Central Bank of Yemen 186.0 283.1

Commercial Banks 61.5 28.9

NonBanking Financing 63.9 66.2

Discrepency -57.2 -45.0


* Preliminary

Chabter three

03

2. Development Capital Expenditures

Development capital spending shrank by 53.8% from YR 275.1 billion or 4.1% of GDP in 2010 to YR 127 billion or 2% of GDP in 2011.

Overall Balance

Domestic and external financing of the budget data show that the fiscal deficit increased from YR 334.4 billion or 5.0% of GDP in 2010 to YR 360.2 billion or 5.5 % of GDP in 2011. III. Domestic Public Debt:

The political crisis, which the country experienced in 2011, spilled over to the financial sector leading to a fall in public revenues and an increase in the budget deficit. This in turn caused an increase in the gross domestic public debt by 21.5% from YR 1562.2 billion or 23.2% of GDP in 2010 to YR 1,898.6 billion or 29.2% of GDP in 2011, thus assisting in absorbing pension fund surpluses.

Treasury bill auctions (in the primary market) constituted a main domestic debt instrument, contributing 33.7% of gross domestic public debt at the end of 2011 compared with 37.8% in the previous year. The purchase value of outstanding treasury bills at the initial auctions in the primary market was YR 639.8 billion at the end of 2011 against YR 590.4 billion in the previous year.

Repurchase operations (REPOs) of treasury bills did not register any change at the end of 2011 and remained at their level in 2010 at YR 65 billion. After taking into consideration government deposits at the Central Bank, net domestic public debt increased from YR 1,284.1 billion or 19.1% of GDP at the end of 2010 to YR 1,662.2 billion or 25.6% of GDP in 2011.

Distribution of Treasury Bills by

Subscribers:

The banking sector portfolio of treasury bills on the basis of purchase value increased from YR 493.7 billion in 2010 to YR 528.9 billion in 2011, while the portfolio of the non-bank sector (pension funds, public enterprises and the private sector) increased by 14.7% from YR 96.7 billion in at the end of 2010 to YR 110.9 billion at the end of 2011.

Distribution of Treasury Bills by

Terms:

Out of the total purchase value of treasury bills, the share of three month treasury bills rose from 65.8% at the end of 2010 to 70.3% at the end of 2011. Correspondingly, the share of six month treasury bills fell from 15.2% to 14.6% and the one year bills from 19% to 15.1% during the same period.

Chabter three

07

IV. External Public Debt

The outstanding external public debt decreased by 1.1% from US dollar 6,144.0 million at the end of 2010 to US dollar 6,076.0 million at the end of 2011. As a ratio of GDP, it fell from 19.5% at the end of 2010 to 20.0% at the end of 2011 which is considered one of the lowest ratios in the Middle East. The debt includes the loans rescheduled with the Paris Club for long periods in 1996, 1997 and 2001, as well as the new facilities contracted after that with the international and regional institutions. The net present value of the Yemeni external public debt was only US dollar 5,722.9 million at the end of 2011 reflecting a concessionality rate of 5.8%.

The external debt service (interest and amortization) rose from 2.7% of exports of goods and services in 2010 to 3.9% in 2011. The external public debt may be classified on donor basis into four categories: international finance institutions, Paris Club donors, non-Paris Club donors and other countries.

Domestic Public Debt

(YR billions)

Items 2010 2011*

1- Overdrafts from Central Bank 477.5 719.0

2- Treasury Bills (Purchasing Value): 590.4 639.8

Banking Sector 493.7 528.9

Non-Banking Sector 96.7 110.9

3- Government Bills 413.7 465.7

Government Bills (Sold to YBRD) 2.3 2.3

Government Bills (Sold to CAC) 4.5 4.5

Government Bills (Sold to Pension funds) 406.9 458.9

4- Islamic Sukuk 0.0 3.3

5- Re-Purchasing: 65.0 65.0

6- Other advances, Banking sector 15.6 5.8

7- Gross Domestic Public Debt 1562.2 1898.6

8- Gross Domestic Public Debt Banking Sector 1058.6 1328.8

9- Government Deposits at the Central Bank -278.1 -236.4

10 – Net Domestic Public Debt Banking Sector 780.5 1092.4

11- Domestic Public Debt non-Banking Sector 503.6 569.8

12- Net Domestic Public Debt 1284.1 1662.2

13- External Public Debt(the outsdanding balance) 1313.6 1299.0

14- Total Public Debt 2597.7 2961.2

Distribution of Treasury Bills by Term Purchase Value

In Percent Billion Rials Time

2011 2010 2011 2010

70.3 65.8 450.1 388.4 3-months

14.6 15.2 93.1 89.7 6-months

15.1 19.0 96.6 112.4 12-

months

100.0 100.0 639.8 590.5 Total

Chabter three

00

1. International Institutions

At the end of 2011, the outstanding debt owing to this group of donors amounted to US dollar 3,271 million or 53.8% of the total outstanding external public debt. The credits of international institutions and particularly the International Development Association do not bear any interest and have long repayment periods with a grace period of up to ten years. Within this group, IDA is the number one lender to Yemen with outstanding loans amounting to US dollar 2,135.4 million. The second lender is the AFSED with loans totaling US dollar 701.4 million and the third is IFAD lending US dollar 133.6 million. Then comes the IDB with US dollar 116.5 million and then the AMF with US dollar 99.1 million followed by the IMF with US dollar 53.4 million. The remaining agencies in this group are OPEC and the EC with US dollar 28.4 million and 3.2 million respectively.

2. Member countries of Paris Club

At the end of 2011, the outstanding debt owing to this group of donors amounted to US dollar 1,748.9 million or 28.8% of the total outstanding external public debt. Within this group, Russia is the number one lender to

Yemen with outstanding loans amounting to US dollar 1,181.6 million. The second lender is Japan with loans totaling US dollar 319.1 million and the third is the United States lending US dollar 97 million. Then comes France with US dollar 79.7 million. The remaining donors in this group are Italy, Spain, Denmark, Netherlands and Germany with total lending amounting to US dollar 71 million.

3. Non-Member Countries of

Paris Club:

At the end of 2011, the outstanding debt owing to this group of donors amounted to US dollar 561.5 million or 9.2% of the total outstanding external public debt. Within this group, the Saudi Fund is the number one lender to Yemen with outstanding loans amounting to US dollar 362.6 million. The second lender is the Kuwaiti Fund with loans totaling US dollar 151.7 million and the third is Korea lending US dollar 27.9 million. Then comes Poland and the Iraqi Fund with total lending amounting to US dollar 19 million.

4 . Other Donors

At the end of 2011, the outstanding debt owing to this group of donors amounted to US dollar 494.4 million or 8.1% of the total outstanding external public debt.

Chabter three

03

Outstanding External Public Debt

(milion US$)

% Outstanding Incl. Arrears 31/12/2011

% Outstanding Incl. Arrears 31/12/2010

Creditor

28.8 1748.9 28.5 1753.3 Paris Club Countries

19.4 1181.6 19.5 1197.9 Russian Federation

5.2 319.1 4.9 303.3 Japan

1.6 97.1 1.6 97.5 U.S.A

1.3 79.7 1.3 81.6 France

0.7 44.7 0.7 44.4 Italy

0.3 20.3 0.3 21.8 Spain

0.04 2.6 0.04 2.7 Denmark

0.04 2.3 0.04 2.5 Holland

0.02 1.5 0.03 1.6 Germany

9.2 561.5 9.4 578.6 Non-Paris Club Countries

6.0 362.6 6.1 373.9 Saudi Arabia

2.50 151.7 2.4 149.4 Kuwait Dev. Fund

0.5 27.9 0.5 28.6 Korea

0.2 11.8 0.2 13.0 Iraqi Dev. Fund

0.1 7.5 0.2 13.7 poland

8.1 494.6 7.8 482.0 Other

53.8 3271.0 54.2 3330.1 Int'l & Regional Financing Institutions

35.1 2135.4 35.5 2179.8 IDA

11.5 701.4 11.3 697.3 AFESD

2.2 133.6 2.2 133.3 IFAD

1.9 116.5 1.7 107.5 Islamic Dev. Bank

1.6 99.1 1.6 99.3 AMF

0.9 53.4 1.3 77.8 IMF

0.5 28.4 0.5 31.5 OPEC

0.05 3.2 0.1 3.6 EEC

100.0 6076.0 100.0 6144.0 Grand Total

Chabter three

37

I. Monetary, Credit and Banking

Sector Developments:

1. Monetary Policy:

In spite of tottering political crisis that

the homeland has witnessed during

2011 and resulted in a suspension of

the wheels of economic and social

developments and a fall of economic

situation, the Central Bank in 2011

succeeded in protecting the value of

national currency through the

attainment of a greater possible

balance between containing

inflationary pressures and relative

stability of the exchange rate on the

one hand, and stimulating economic

activity on the other. The monetary

policy followed an apparent flexibility

with latest monetary developments in

the local, regional and international

areas with the aim of maintaining

monetary and banking stability

represented in steadiness of overall

price level, preserving a relative

firmness of rial exchange rate and

securing an interest rate structure in

harmony with local economic

developments and money market

evolutions, in addition to the

continuation of soundness and

firmness of banking system. The

benchmark minimum interest rate on

bank deposits has been kept

unchanged at 20% since March 2010,

the fact which consolidates confidence

in the national economy. The

outcomes of monetary policy were

positive as manifested in realization of

monetary stability and maintaining

relative fixedness of the exchange rate

of the rial vis-à-vis the dollar.

To attain the final objective of

monetary policy, represented in price

stability, the Central Bank examined

closely the developments in economic

activity in order to determine the

suitable level of domestic liquidity and

then undertake the necessary

measures to reach that level.

Statutory reserve requirements on

foreign currency deposits were

changed from 20% to 10% starting

March 2011. The Central Bank doesn’t

pay interest on these reserves.

Mandatory reserve requirement on rial

deposits has been maintained without

change at 7% since March 2008

without interest paid on these

reserves. The central Bank issued a

resolution ordering the calculation of

statutory reserve requirement on

foreign currency weekly, based on the

average days of the week . These

decisions respond to developments in

foreign exchange market and cope

Chabter four

38

with the great pressures that

commercial banks faced due to the

rising demand for foreign currencies

during crisis months. The Central Bank

continued replenishing the market with

part of its needs of foreign currencies.

The Central Bank sales of foreign

currencies to banks in 2011 amounted

to about US$1563.2 million, mainly to

cover imports of essential foodstuffs

represented in wheat, rice and sugar.

The Central Bank consolidated these

measures by taking several prudential

steps which contributed in protecting

local banks against perils ensuing from

unstableness of the political stalemate

that the country experienced in 2011,

along with the hazards that world

banks had Witnessed resulting from

the world financial crisis in mid-2008.

2. The Exchange Rate

The freely exchange rate system has

been the regime adopted by Yemen

for more than a decade and the

Central Bank intervenes to influence

the direction of the exchange rate only

in the case of short term wide

fluctuations in the foreign exchange

market, which are unwarranted by

economic fundamentals.

This policy has contributed in

enhancing economic stability and

bolstering investors' confidence in the

national economy. As a consequence

of the package of measures

undertaken by the Central Bank during

crisis months in 2011, the confidence

in the national currency was bolstered

and the exchange rate came back to

the levels prevailing in 2010. The

average exchange rate of the US

dollar against the Yemeni rial

amounted YR213.8 at the end of 2011,

which was the same rate, recorded at

the end of the previous year.

3. The Interest Rate

In conformity with political

developments which presented itself in

the political impasse Yemen suffered

and the developments that the

exchange markets witnessed during

2011 manifested in short term

fluctuations in the exchange market,

which are unwarranted by economic

fundamentals, the benchmark

minimum interest rate on bank

deposits has been kept unchanged

since March 2010 at 20%.

Chabter four

39

4. Money Supply and Factors

affecting it

The increase in domestic liquidity in

2011 was YR 1.6 billion or 0.1%,

compared with an increase of YR

191billion or 9% in 2010. The

expansion in domestic liquidity in 2011

was the result of an increase in net

domestic assets of the banking system

of YR 311.9 billion, combined with a

decrease in the net foreign assets of

the banking system amounting to YR

314 billion.

The main factor behind the fall in the

net foreign assets of the banking

system is the increase of C.B.Y.

financing of petroleum products

imports for local consumption

amounting to US$2.5 billion in 2011.

The increase in net domestic assets in

2011 was the end product of the rise in

budget financing by YR 313.9 billion

,the expansion in credit to non-

Government sectors by YR 5 billion

and the decrease in net other items

by YR 2 billion.

Monetary Survey

(YR Billions) 2011 2010 Items

2268.3 2266.7 Broad money

993.0 786.1 Money

777.4 546.8 Currency Outside Banks

215.6 239.3 Demand Deposits

673.0 702.6 Quasi Rial Money

602.2 778 Deposits in Foreign Currency

1379.2 1693.1 Net Foreign Assets

918.6 1216.4 Central Bank of Yemen

460.6 476.8 Commercial Banks

889.0 573.6 Net Domestic Assets

1092.4 780.5 Credit to Government (net)

1092.4 780.5 Total budget financing (Net)

544.7 539.3 Credit to Non-governmental

366.9 438.3 Private Sector

177.8 101 Public enterprises

748.1- -746.2

Other items (Net) % of Broad money of

previous year

13.8- -4.8 Net Foreign Assets

13.9 13.9 Net Domestic Assets

13.8 11.9 Total budget financing (Net)

3.1- 1.6 Credit to private sector % of previous year

0.1 9.2 Broad money

11.9 3 Rial broad money

16.3- 8.5 Credit to private sector

Chabter four

40

The deficit in the position of the budget

with the banking system increased

from YR 248 billion in2010 to YR 312

billion in 2011.This was caused by the

political deadlock that Yemen went

through in 2011 affecting non-oil

revenues. In 2011, M1 grew by YR207

billion while quasi-money fell by

YR206 billion. M1 growth was the

result of an increase of YR 231billion

in currency in circulation and a decline

of YR24 billion in rial demand deposits.

The fall in quasi money in 2011 was

caused by the decrease of YR 30

billion in rial saving , earmarked ,time

and pension fund deposits and the

decline of YR 176 billion in foreign

currency deposits. This was caused by

the political stalemate which the

country underwent in 2011.

Currency in circulation rose from 37%

of rial broad money in 2010 to 47% in

2011, while rial quasi-money fell from

47% in 2010 to 40% in 2011. Foreign

currency deposits declined from 34%

of broad money in 2010 to 27% in

2011.

II. Central Bank Activities

1. Central Bank Balance Sheet

The Central Bank Balance sheet total

increased by 1.2% from YR 1846

billion at the end of 2010 to YR 1868

billion at the end of 2011, compared

with a decrease of 0.6% in 2010.

Assets

The net foreign assets of the Central

Bank decreased by 24.5% from YR

1216 billion at the end of 2010 to YR

919 billion at the end of 2011,

compared with a decline of 13% the

previous year. Gross foreign assets

declined as a ratio of total assets from

69 % at the end of 2010 to 52% at the

end of 2011.

Net claims on Government rose by

186 % in 2011 compared with 1393%

in 2010. This is attributable to the

decline in non-oil public revenues.

Chabter four

41

Liabilities

Reserve money (currency outside

banks and bank balances with the

Central Bank) increased by 16% from

YR 824 billion at the end of 2010 to YR

954 billion at the end of 2011,

compared with an increase of 8 % the

previous year. The change in reserve

money in 2011 was the end product of

an increase of YR 229 billion in

currency issued and a decrease of YR

99 billion in bank balances with the

Central Bank, caused by the political

crisis experienced in the country in

2011, which provoked a decline in

bank deposits both in local and foreign

currencies, together with the effect of

lowering statutory reserve

requirements on foreign currency

deposits from 20% to 10% starting

March 2011.

Public sector enterprises’ deposits fell

by 39 % in 2011 against an increase of

9 % in 2010. Pension fund deposits,

mostly in foreign currencies, declined

from YR 65 billion in December 2010

to YR 59 billion in December 2011.

Net other items fell by 2.5% in 2011

compared with a decline of 8% in

2010.

Balance Sheet of Central Bank of Yemen

(YR Billions)

2011 2010 Description

968.8 1270.2 Foreign Assets

899.6 575.4 Domestic Assets

719.0 477.5 Claims on Government

157.4 82.9 Claims on Public Enterprises

- - Claims on Banks

23.3 15 Fixed and Other Assets

1868.4 1845.6 Assets = Liabilities

954.5 823.9 Reserve money

800.3 571 Currency in Circulation outside banks

154.2 252.9 Banker’s Deposits

236.4 278.1 Government Deposits

83.3 136.2 Public Enterprises Deposits

59.4 65.4 Social Security Funds Deposits

0 0 Certificates of Deposit

50.2 53.8 Foreign Liabilities

484.6 488.2 Other Liabilities

46.4 43.4 Capital and Reserve

241.7 240.5 Foreign Exchange Valuation

76.2 76.1 SDR Allocations

120.2 128.2 Other Liabilities

Chabter four

42

2- Central Bank Net Profits

Central Bank net profits amounted

toYR22.9 billion in 2011 compared

with YR39 billion in 2010, a decrease

of 41% .The revenues declined from

YR 62.6 billion in 2010 to YR 48.6

billion in 2011, a decline of 22%.

The expenditure rose by 9% from YR

23.6 billion in 2010 to YR 25.7 billion in

2011.

3- Currency Issued

Currency issued amounted to YR800

billion in 2011, which is 40% higher

than what it was in2010, while in 2010

it was 3.5% higher than what it was in

2009. Concerning the distribution by

denomination, the YR 1,000 note

represented 76 % of the currency

issued in terms of value, followed by

YR 500 note (19 %), then YR 250, YR

100 and YR200 notes (2.5%, 1.5%

and 0.5% respectively), and the

remaining 0.5% for the lower

denominations (YR 50, 20, 10 and 5).

The larger shares of the YR 1,000 and

YR 500 denominations have facilitated

the processes of counting, sorting,

transporting and warehousing the

banknotes.

4- The Clearing House

In 2011, the number of cheques

cleared and settled at the clearing

rooms of the Central Bank was

494,000 cheques amounting to YR

1837.5 billion. These figures were

lower than in 2010 by 27 % in number

and 15.5 % in value respectively.

Returned cheques were 16,600

cheques amounting to YR 57 billion in

2011, compared with 21,300 cheques

amounting to YR 69 billion in 2010.

The ratio of returned cheques to

cleared cheques value fell from 3.2%

in 2010 to 3.1% in 2011.

After introducing clearing services

in U.S. dollar starting 2004, about

41,000 cheques were transacted

with a total value of US$1509

million in 2010, against 56,500

cheques with a total value of US$

2074 million in 2010, i. e. a

decrease of 27% in number and

27% in value.

Chabter four

43

III. The Banking Sector

1. Commercial and Islamic Banks

A) Consolidated Balance Sheet:

As a result of the exceptional

circumstances that shake up the

country in 2011 and presented itself in

the political emergency, the

consolidated balance sheet of the

commercial and Islamic banks fell in

2011 by 9 % to reach a total of YR

1766 billion, compared with an

increase of 15% in the previous year.

Assets

Net foreign assets declined in 2011

by 3 % to reach a level of YR 461

billion, compared with an increase of

19 % in the previous year. As a ratio

of total assets, gross foreign assets

increased from 26.4 % at the end of

2010 to 27.0 % at the end 0f 2011.

Bank reserves (currency in bank

vaults and balances at the Central

Bank) fell by YR 101 billion or 36.5%

in 2011 to reach a level of YR 175

billion compared with YR 276 billion

at the end of 2010. This is attributed

to the decline in deposits in local and

foreign currencies as well as the

effect of lowering mandatory reserve

requirement on foreign currency

deposits from 20% to 10% since

March 2011.

Consolidated Balance Sheet of Commercial and Islamic Banks

(YR Billions)



55.7 40.3 - Foreign currency 213.7 233.4 - Balances with banks abroad 208.0 236.6 - foreign investment 174.9 275.5 Reserves

22.9 24.1 - Local currency 152.1 251.4 - Deposits with Central Bank


997.8 1038 Loans and Advances

366.9 438.3 - Private Sector 20.4 18.1 - Public enterprises 610.4 581.5 - Government 115.6 110 Other Assets

1765.8 1933.8 Assets = Liabilities


15.0 31.2 - Deposits of foreign banks 1.9 2.4 - Nonresidents deposits

1348.6 1518.8 Deposits

162.3 175.6 - Demand Deposits 452.0 472.3 - Time Deposits 127.1 128.8 - Savings Deposits 34.4 36.1 - Earmarked Deposits 572.3 705.5 - Foreign Currency Deposits

0.5 0.5 - Government Deposits 400.3 381.4 Other Liabilities

181.6 176.5 Capital and Reserves 218.7 204.9 Other Liabilities

Chabter four

44

As a ratio of total deposits, bank

reserves declined from 18% in2010

to 13% in 2011.

Loans and advances fell by 4% in

2011 to YR 998 billion. This is mainly

attributable to the decline in private

sector credit by 16% in 2011,

compared with a rise of 8.5% in the

previous year.

Bank intermediation is still limited in

Yemen, as private sector credit did

not exceed 21%of total assets at the

end of 2011, while 70% of these

assets are placed in risk free

investment, consisting of foreign

assets (27%), treasury bills (35%)

and Central Bank balances (8%).

Liabilities

Total deposits in 2011 decreased by

11 % to YR 1349 billion (excluding

non-resident deposits), compared

with a growth of 13 % in the previous

year. Rial demand deposits, rial

quasi money deposits and foreign

currency deposits declined by 8 %, 4

% and 19% respectively, reflecting

the political crisis.

Net other liabilities increased by 5 %

to YR 285 billion in 2011, against an

increase of 17 % the previous year,

reflecting partially the efforts of the

Central Bank aiming at strengthening

the capital adequacy of banks.

B) Deposit structure:

Time deposits in local currency

dropped by4% in 2011, compared with

a rise of 11% in 2010. Saving deposits

also in rial, went down by 1 % in 2011,

against a growth of 5% in 2010. Rial

demand deposits also decreased by

8% in 2011, while in 2010 they

recorded an increase of 6%. Rial

Earmarked deposits diminished by

5%in 2011, compared with a reduction

of 42% in the previous year.

Foreign currency deposits fell by 19 %

in 2011 against a growth of 25 % in

2010. On the other hand, Yemeni rial

total deposits declined by 4.5% in

2011 against an increase of 5 % in

2010. This led to the dropping of

foreign currency deposits as a ratio of

total deposits from 46 % at the end of

2010 to 42 % at the end of 2011.

C) Credit facilities

The total outstanding balance of credit

facilities offered to the private sector

by commercial and Islamic banks

diminished by 16 % in 2011, reflecting

the political impasse, against a rise by

8.5 % in the previous year. Trade

Chabter four

45

finance declined from 55 % of total

credit facilities in 2010 to 44%in 2011.

Finance allotted to construction

subsided from 6.5% in 2010 to 5.2% in

2011. On the other hand, the share of

industry rose from 11% in 2010 to 12%

in 2011.The share of agriculture and

fisheries increased slightly from 1.4%

in 2010 to 1.9% in 2011. Classified

loans and advances, for which

provisions must be made, increased its

share from 14 % in 2010 to 21% in

2011. These provisions amounted to

71 % of the classified loans, which is a

high ratio designed to protect the

Yemeni banking system from facing

non-performing loan crises.

Short term loans and advanced

increased from 35% of total facilities in

2010 to 36% in 2011, while medium

and long term loans went down from

13.3% in 2010 to 11.5% in 2011.

The investments of Islamic banks

declined from 38 % of total credit in

2010 to 32 % in 2011.

2 -Commercial Banks


The consolidated balance sheet of the

commercial banks shrinked in 2011by

6% to reach a total of YR 1224 billion,

compared with an increase of 15% in

the previous year.

Commercial banks increased their

share as a ratio of the consolidated

balance sheet of the commercial and

Islamic banks from 67% in 2010 to

69% in 2011.

Assets

Net foreign assets of commercial

banks increased in 2011by 1.5% to

reach level of YR 188 billion,


the previous year. As a ratio of total

assets, gross foreign assets

maintained its share at 16%. As a

ratio of net foreign assets of

commercial and Islamic banks, the

share of commercial banks rose from

39% in 2010 to 41% in 2011.

Bank reserves (currency in bank

vaults and balances at the Central

Bank) dropped by YR 68 billion or

39% in 2011 to reach a level of YR

105 billion, compared with YR

173billion at the end of 2010.

Chabter four

46

This is attributed to the dipping in

deposits with Central Bank .As a ratio

of total deposits; bank reserves

lowered its share from 16% in 2010

to 11% in 2011.

Gross claims on government grew by

4% in 2011, while Private sector

credit, YR222, was 11% lower than in

the previous year.

Liabilities

Total deposits of commercial banks

in 2011 shrinked by 10% to YR 956

billion (excluding non-resident

deposits), compared with a growth of

13% in the previous year. . Rial

demand deposits, rial quasi money

deposits and foreign currency

deposits subsided by 10%, 4% and

18% respectively, reflecting the

political deadlock.

Net other liabilities increased by

34.0% to YR 187 billion, against a

growth of 11% the previous year,

reflecting, in part, the efforts of the

Central Bank aiming at strengthening

the capital adequacy of banks.

B) Deposit Structure of

Commercial Banks

Time deposits in local currency fell

by 5% in 2011, compared with a rise

of 19% in 2010. Saving deposits,

also in rial, grew by 2% in 2011,

Consolidated Balance Sheet of Commercial Banks

(YR Billions)



164.6 187 - Balance with banks abroad 0 0 - Claims on nonresidents

34.6 23.6 - Others 105.2 173.2 Reserves 14.5 15 - Local currency 90.8 158.2 - Deposits with Central Bank


849.9 848.6 Loans and Advances

222.3 249 - Private Sector 20.4 18.1 - Public enterprises 607.1 581.5 - Government 69.6 69.6 Other Assets

1224.0 1302 Assets = Liabilities


9.7 23.2 - Deposits of foreign banks 1.9 2.4 - Nonresidents deposits

955.6 1066.4 Deposits

125.7 139 - Demand Deposits 349.7 368.9 - Time Deposits 96.2 94.4 - Savings Deposits 31.4 31.9 - Earmarked Deposits 352.6 432.2 - Foreign Currency Deposits

0.1 0.1 - Government Deposits 256.8 210 Other Liabilities 114.2 107.3 Capital and Reserves 142.5 102.6 Other Liabilities

Chabter four

47

against 10% in 2010.Rial demand

deposits dropped by 10% in 2011,


2010. Rial earmarked deposits fell by

2% in 2011, compared with a decline

of 44% in 2010.

Foreign currency deposits shrinked

by 18%in 2011, against a growth of

19% in 2010. On the other hand,

Yemeni rial total deposits dropped by

5%in 2011, against a rise by 9% in

2010. This led to the decrease of

foreign currency deposits as a ratio

of total deposits from 40.5% in 2010

to 37% in 2011.

3- Islamic Banks


The consolidated balance sheet of the

Islamic banks diminished in 2011 by

14% to reach a total of YR 542 billion,


the previous year. As a ratio of the

commercial and Islamic banks

consolidated balance sheet, Islamic

banks lowered their share from 33% in

2010 to 31% in 2011.

Assets

Net foreign assets of Islamic banks in

2011 went down by 6% to reach a

level of YR 273 billion, compared

with an increase of 23% in the

previous year. As a ratio of total

assets, gross foreign assets

increased from 47% at the end of

2010 to 51% at the end of 2011.

As a ratio of net foreign assets of

Commercial and Islamic banks, the

share of Islamic banks fell from 61%

in 2010 to 59% in 2011.Bank

reserves (currency in bank vaults and

balances at the Central Bank)

diminished by YR 32 billion or 32% to

reach a level of YR 70 billion in 2011,

compared with YR 102 billion at the

end of 2010. This is attributed to the

decrease in the deposits with the

Central Bank. As a ratio of total

deposits, bank reserves went down

from 23% in 2010 to 18% in 2011.

Loans and advances shrinked by

22% in 2011 to reach a level of

YR148 billion, compared with YR189

billion at the end of 2010.

Chabter four

48

Liabilities

Total deposits in 2011 declined by

13% to YR 393 billion, compared with

a growth of 13% in the previous year.

This is attributed to the fall of foreign

currency deposits. As a ratio of total

deposits of commercial and Islamic

banks, the share of Islamic banks

decreased from 30% in 2010 to 29%

in 2011.

Net other liabilities dropped by 26%

in 2011 to YR 97.5 billion, against an

increase of 23% the previous year.

B) Deposit Structure of Islamic

Banks

Foreign currency deposits declined

by 20% in 2011, against a growth of

35% in 2010. On the other hand,

Yemeni rial total deposits went down

by 3% against a decline by 10% in

2010 . This led to the fall of foreign

currency deposits as a ratio of total

deposits from 60% at the end of 2010

to 56% at the end of 2011.

Consolidated Balance Sheet of Islamic Banks

(YR Billions)



49.0 46.4 - Balance with banks abroad 207.0 235.0 - Foreign investment 22.2 18.3 - Others 69.7 102.3 Reserves

8.4 9.1 - Local currency 61.3 93.2 - Deposits with Central Bank


147.9 189.3 Loans and advances

144.6 189.3 - Private Sector 0.0 0.0 - Public enterprises 3.3 0 - Government

46.1 40.4 Other Assets 542.0 631.8 Assets = Liabilities

5.3 8.0 Foreign Liabilities 5.3 8.0 - Deposits of foreign banks 0.0 0.0 - Nonresidents deposits

393.0 452.4 Deposits

36.6 36.6 - Demand Deposits 102.3 103.4 - Time Deposits 30.9 34.4 - Savings Deposits 3.0 4.2 - Earmarked Deposits

219.7 273.3 - Foreign Currency Deposits 0.5 0.4 - Government Deposits

143.6 171.5 Other Liabilities 67.4 69.2 Capital and Reserves 76.2 102.3 Other Liabilities

Chabter four

49

4 .Bank Branches

In order to spread the banking habit

and expand the provision of bank

services, several new bank branches

and offices were opened in 2011 as is

shown in the following table.

New licenses were issued by the

Central Bank for money changers and

bureaux de change all over the country

.The number of these licenses

amounted to 517 in 2011 compared

with 601 in 2010 and below is a table

showing the number of licenses

granted in the various governorates of

the republic.

5. Payment system

2011 witnessed many developments in

the payments system. Many ATMs

were established .

The number of ATMs installed in the

country grew by 13% from 446 in 2010

to 502 in 2011. The number ATMs

operations declined in 2011 by 18%,


2010. POS amounted to 1901 in 2011

against 1887 in the previous year. The

number of POS operations went down

by 6%, compared with a growth of

10% in the previous year. Bank cards

rose in 2011 by 26%, compared with

15.5% in 2010.

New Branches & offices of Banks in 2011

Bank New

Branches/Offices

Bank Date of

Inauguration

A- New Branches Amal Microfinance Bank Hoban,Taiz 07/08/2011

Alkuraimi Microfinance bank

Dares,Sana'a 14/08/2011

Sana'a Street, Hodeida 08/03/2011

Jamal Street, Taiz 08/03/2011

Sana'a Street, Dhamar 27/04/2011

Sheikh Othman,Aden

23/02/2011

B- New Offices Yemen Kuwait Bank

Sheikh Othman,Aden

19/02/2011

Alkuraimi Microfinance bank

Sina Taiz Odain,Ibb

08/03/2011

20/03/2011

Sawan,Sana'a 02/05/2011

Mashhad,Sana'a 02/05/2011

Shamlan,Sana'a 27/04/2011

Dar Saad,Aden 27/02/2011

Payment System Indicators

2011 2010 2009 Year

502 446 365 ATMs

1,901 1,887 2,148 POS

858,986 681,215 589,858 Bank Cards

8,051,616 9,827,889 7,620,788 Number of ATMs operations

139,727 150,548 112,301 Value of ATMs operations(million Rials)

877,066 932,986 846,032 Number of POS operations

31,049 26,140 24,550 Value of POS operations(million Rials)

Number of License Granted to Money Chargers in 2010

Number of licenses granted

Governorate Number of licenses granted

Governorate

1 Al-Mahweet 192 Capital secretariat

6 Al-Mahra 41 Aden

8 Dhale 53 Taiz

17 Dhamar 45 Ibb

6 Abyan 35 Hodeidah

7 Amran 22 Hajja

8 Lahj 21 Mukalla

6 Mareb 15 Sayun

8 Sadda 11 Shabwa

1 Raima 14 Al-Beidha

517 Total

Chabter four

35

I. Balance of Payments

Preliminary data of 2011 indicate

that the overall balance of payments

realized a deficit of US$1398 million,

against a deficit of US$905 million in

2010. The ratio of the overall deficit to

GDP increased from3% in 2010, to

4.6% in 2011. The deficit in the

balance of payment is mainly attributed

to the deficit in the current account

which amounted to US$ 1364 million in

2011, against a deficit of US$ 1123

million in 2010.

The ratio of the current account

deficit to GDP rose from 3.7% in 2010

to 4.5% in 2011 due to the increase in

the deficit in services and income .The

capital account recorded a deficit of

US$ 722 million in 2011, against a

deficit of US$253 million last year. The

ratio of capital account deficit to GDP

rose from 0.8% in 2010 to 2.4% in

2011. For more analysis, the main

indicators and items of balance of

payments shall be discussed

hereunder.

Main Indicators of Balance of Payments As a Ratio of Gross Domestic Product(1)

1022** 1020* Item

5.4- 7.6- Current Account

4.5 7.6- Trade Balance

77.4 74.4 Exports

77.2- 76.6- Imports

7.4- 7.7- Services (Net)

7.5- 4.5- Income (Net)

7.0 5.8 Current Transfers (Net)

7.5- 4.7- Capital Account (Net)

5.5- -3.0 Overall Balance

* At Current Prices

** Preliminary

-3000

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

2000

2500

2006 2007 2008 2009 2010 2011

US

$ b

illio

ns

Balance of Payments

Current Account

Capital & Financial Account

Overall Balance

Chabter five

35

A-Current Account:

Current account represents transac-

tions that pertain to goods, services,

income and current transfers. Current

account deficit increased from US$

1123 million in 2010 to US$ 1364 mil-

lion in 2011. Ratio of this deficit to

GDP at current prices amounted to

4.5% in 2011, against a deficit of 3.7%

last year.

Goods and Services:

The deficit in goods and services

balance fell from US$1529 million in

2010 to US$947million in 2011.The

fall is attributed to the realization of a

surplus in trade balance, due to the

rise in oil export prices from US$79.8

per barrel in 2010 to US$111.1 in

2011.

Trade Balance 9

In 2011, the trade balance record-

ed a surplus of US$120 million,


2010. Ratio of this surplus to GDP

amounted to 0.4% in 2011. The reali-

zation of this surplus is attributed to

the rise of oil and gas exports.

Exports9

The value of exports increased

from US$7650 million in 2010 to

US$8662 million in 2011, i.e.an

increase of US$1012 million, or 13%

over last year. Ratio of exports to

GDP amounted to 28.5%compared

with 25% last year.

Oil and Gas Exports9

Total value of oil and gas exports

in 2011 amounted to US$7850 mil-

lion, forming 91% of the total value of

exports. Oil and gas exports rose

from US$6280 million in 2010 to

US$7850 million in 2011, i.e. a rise of

US$1570 million, or 25% over last

year, basically attributed to the rise in

international oil prices and com-

mencement of LNG exports. On ex-

cluding the share of oil companies,

government’s share of oil and gas

exports increased by 33% from

US$2769 million in 2010 to US$3693

million in 2011, attributable to the in-

crease in average oil export prices .

Chabter five

33

Imports9

Imports increased by 0.8%, from

US $8473 million in 2010 to US

$8542.5 million in 2011, compared

with a rise of 8% last year . Its ratio to

GDP increased slightly from 27.7% in

2010 to 28.1% in 2011.

2 - Services (Net):

Deficit in the services balance in-

creased by US$360 million, or 51%

amounting to US$1066 million during

2011 against US$706 million during

2010. This is attributed to the decline

of total receipts by US$364 million

from US$1612 million during 2010 to

US$1248 million during 2011. The in-

crease in the deficit is basically at-

tributed to the fall in travel receipts by

39% due to the events that Yemen

witnessed in 2011.

3 -Income (Net):

Deficit in the income balance in-

creased by 49% from US$1718 mil-

lion during 2011 to US$2552 million

during 2011. This is attributed to the

rise of total payments by US$833 mil-

lion from US$1772 million during

2010 to US$2605 million during 2011

as a result of the increase of the

earnings of foreign direct investment

companies remitted to abroad. More-

over, total receipts declined by

US$1.2million during 2011 ,due to the

decrease in portfolio and other in-

vestment income.

4 -Current Transfers (Net):

Net Current transfers balance sur-

plus recorded an increase of US$10

million from US$2123 million in 2010

to US$2134 million in 2011. Receipts

grew by US$2 million in 2011 com-

pared with a rise of US$553 million in

2010. This is attributable to the rise in

government transfers receipt by

US$128 million, while receipts from

transfers of other sectors diminished

by US$117 million in 2011. On the

other hand, current transfers pay-

ments shrinked by US$8 million in

2011, compared with a drop of

US$56 million in 2010.

B- Capital and Financial Ac-

count:

This account forms the second

component of the balance of payments

and represents the government and

private sector capital movements, rep-

resented by foreign loans drawings,

amortization payments and move-

ments of government and private in-

Chabter five

35

vestments. In 2011, this account rec-

orded a deficit of US$722 million,


2010. Ratio of the deficit in the capital

and financial account to GDP rose

from 0.8%in 2010 to 2.4% in 2011.

Foreign direct investment recorded a

deficit of US$713 million in 2011,


2010. The deficit rise is attributed to

the decline of foreign oil companies

investment inflows. The position of

other investments recorded a deficit of

US$9 million in 2011 compared with a

deficit of US$160 million in 2010. The

deficit fall is due to the shift of the posi-

tion of net foreign assets of commer-

cial and Islamic banks from an in-

crease in 2010 to a decrease in

2011.As for drawings from foreign

loans, it amounted to US$97 million

and its ratio to GDP amounted to 0.3%

against 1.2%in the year 2010. Amorti-

zation obligations amounted to

US$181 million, and its ratio to GDP

amounted 0.6%, compared with 0.8%

in the previous year.

C- Overall Balance9

Overall balance recorded a deficit of

US$1398 million in 2011, and repre-

sented about 4.6% of GDP, against a

deficit of 3% of GDP last year. The def-

icit rise is mainly due to the political

events that the country witnessed in

2011. These were reflected on net for-

eign assets of the Central Bank which

has recorded in 2011 a decline of

US$1392 million, compared with a de-

crease of US$811million in the previ-

ous year.

Chabter five

35

7422 7424 Item

774.7 647.1 General Government

1,359.1 1,476.3 Other Sectors

-722.2 -253.1 Capital and Financial Account

-722.2 -253.1 1- Financial Account

-712.8 -93.3 1-1 Direct Investment

-756.5 -135.9 of which : oil companies investment

1,216.6 2,021.8 Inflows

-1,973.1 -

2,157.7 Outflows

-9.4 -159.8 1-2 Other Investment

-84.0 104.6 Government Loans (Net)

97.3 353.5 Drawings

-181.3 -248.9 Amortization Obligation

4.1 26.0 Trade Credit

70.5 -290.4 Commercial Banks

0.0 0.0 Other Sectors

688.3 471.0 Errors and Omissions

-1,398.2 -905.3 Overall Balance

1,398.2 905.3 Financing

1,391.8 810.7 a- Net Reserves (Increase -)

1,410.0 830.8 Reserve

-18.2 -20.1 Monetary Authorities Liabilities

-25.1 -27.4 International Monetary Fund Loans (Net)

0.0 0.0 Arab Monetary Fund Loans (Net)

6.9 7.2 Liabilities constituting Reserves of Foreign

Monetary Authorities

6.4 94.5 b- Debt Relief and Arrears

* Preliminary

7422 7424 Item

-1,364.3 -1,123.2 Current Account:

-946.6 -1,528.9 Goods and Services

119.6 -823.1 1 Trade Balance

8,662.2 7,649.8 Exports:

7,850.0 6,280.4 Crude Oil

3,693.4 2,769.1 Government Share

4,156.6 3,511.4 Companies Share

-8,542.5 -8,472.9 Imports

-1,066.2 -705.8 2 Services (Net)

1,247.9 1,611.7 Credit

-2,314.0 -2,317.5 Debit

-853.9 -847.7 Transportation

600.6 978.2 Travel

80.7 80.7 Communication

-208.7 -227.9 Construction Services

-191.0 -189.4 Insurance

-560.9 -561.4 Other Business Services

103.5 98.3 Government Services

-2,551.6 -1,717.6 3- Income (Net)

53.3 54.5 Credit

-2,604.9 -1,772.1 Debit

-2,239.6 -1,408.3 Direct Investment Income

-23.4 -20.7 Portfolio and Other Investment In-

come

2,133.8 2,123.4 4 Current Transfers (Net)

2,183.4 2,181.1 Credit

-49.6 -57.7 Debit

Balance of Payment (US$ Millions)

Chabter five

35

II – Foreign Trade9

Statistics of Foreign Trade between

Yemen and the rest of the world during

2011 showed an acceptable develop-

ment despite regional and international

uncertainties and unstable local politi-

cal crisis.

A. Trade Balance9

Trade balance recorded a deficit

ofYR591billion in 2011, compared with

a deficit of YR609 billion in the previ-

ous year. The decrease in the deficit is

attributable to the increase in exports

by a higher ratio than the rise in im-

ports. Exports grew by 5% to reach YR

1479 billion in 2011, while imports rose

by 2% compared with a growth of 8%

in the previous year.

B-Commodity Composition of Foreign Trade:

1. Exports

Exports and re-exports increased

by 5% in 2011 compared with a rise

of 11% last year .This is attributable

to the growth of indigenous exports

by 6% in 2011.The rise in exports

and re-exports was the end product

of the increase of world oil prices.

Re-exports during 2011 declined by

19%, and its ratio to GDP fell from

0.8% in 2010 to 0.6% in 2011 . Ana-

lysing the commodity composition of

exports by SITC:

Oil and its products: recorded an

increase of 5% during 2011, com-

pared with a rise of 9% last year,

Trade Balance

(YR Billions)

1022** 1020 Item

-591.1 -608.8 Trade balance

1,478.8 1,414.1 Exports(1)

2,0.070 2,022.9 Imports

Source: Central Statistical Organization.

1- Including Re-Exports

-1000

-500

0

500

1000

1500

2000

2500

2006 2007 2008 2009 2010 2011

Trade Balance

Exports Imports Trade Balance

Chabter five

35

attributable basically to the rise of

international oil prices.

Non-oil raw materials: recorded an

increase of 9% during 2011, com-

pared with a rise of 33% last year

.This is attributable to the increase

of exports of food-stuffs.

Manufactured goods: recorded a

decrease of 8% during 2011, com-

pared with an increase of 16.8%

last year. This is attributed to the

exports of machinery & transport

equipment and miscellaneous

manufactures during 2011.

2. Imports:

Imports during 2011 grew by 2 %,

compared with a rise of 8% during

2010. This is mainly due to the in-

crease in imports of oil and food

stuffs.

Analyzing the commodity

Composition of imports by SITC:

Oil and its products: recorded a rise

of 54% , compared with an increase

of 8% last year. This is attributable

basically to the rise of international

oil prices and importing a large part

of petroleum products as a result of

the breakdown of local oil pipeline.

Exports by SITC group(1)

(YR Billions)

% 2011 % 2010 Item

5.8 247.7 676 6.76 Food & Live Animals

4.7 4.2 074 676 Beverages and Tobacco

0.4 4.6 0.4 275 Raw Materials inedible

77.7 2.745.4 88702 6.54276 Mineral Fuel and Lub. Oil

4.2 7.7 0.1 67. Animals & Vegetables Oil

0.5 6.2 074 67. Chemicals

1.1 24.6 0.8 6076 Manufactures Classified by Materials

2.7 75.8 2.3 .570 Machinery & Transport Equipment

4.5 5.5 07. 478 Miscellaneous Man.

0.1 2.7 076 876 Commodities not classi-fied elsewhere

244 2.567.7 600 6.46476 Total Remarks : 7.8 115.3 7.5 106.2 Non-oil raw materials

3.9 57.6 4.4 62.8 Manufactured goods

Source: Central statistical organization 1 Including Re -exports

Imports by SITC group

(YR Billions)

% 2011 % 2010 Item

29.3 605.7 25.8 521.7 Food & Live Animals

1.2 25.2 1.4 28.0 Beverages and Tobacco

0.6 13.3 0.9 18.4 Raw Materials inedible

31.6 654.5 21.0 424.1 Mineral Fuel and Lub. Oil

2.03 42.0 3.4 69.4 Animals & Vegetables Oil

5.04 104.4 5.5 112.2 Chemicals

11.9 246.8 16.3 330.1 Manufactures Classified by Materials

15.5 321.0 22.02 445.6 Machinery & Transport Equipment

2.7 56.6 3.5 70.2 Miscellaneous Man.

0.02 4.9 0.2 3.3 Commodities not classified elsewhere

100 2,070.0 100 2,022.9 Total Remarks :

33.15 686.1 31.5 637.5 Non-oil raw materials

35.2 729.3 47.52 961.3 Manufactured goods


Chabter five

50

Non-oil raw materials: recorded an

increase of 8% in 2011, compared

with a rise of 19% last year. This is

attributed basically to the increase of

imports of food stuffs.

Manufactured goods: recorded a de-

crease of 24% during 2011, com-

pared with an increase of 2.0% last

year. This is attributed to the fall of

imports of machinery& transport

equipment and miscellaneous manu-

factures.

C- Foreign Trade by Economic Blocks 9

1. Exports9

The relative share of the Non-Arab

Asian countries decreased from 78%

in 2010 to 76% in 2011, although their

export value rose by 2% during 2011.

Next came Arab Countries, which de-

creased its share from14.5% in 2010

to 13.2% in 2011, due to a fall in ex-

ports value by 5% during 2011.

The relative share of EC countries in-

creased from 5% in 2010 to 6% in

2011 , attributed to a rise of export val-

ue by 29% during 2011.

Exports to American countries in-

creased by 85% during 2011. As a re-

sult, its relative share rose from 2.6%

in 2010 to 4.6%in 2011.

2. Imports9

In spite of the increase of imports

from Arab Countries by 2% during

2011, its share fell slightly from 37.0%

in 2010 to 36.8% in 2011 .Next came

Non-Arab Asian countries which low-

ered its share from 25.7% in 2010 to

22.4% in 2011 ,due to a fall in their im-

port value by 11% in 2011. Next came

EC countries which decreased their

share from 16.0% in 2010 to 15.7% in

2011. Next came American Countries

which lowered their share from 12% in

2010 to 11% in 2011 due to a fall in

import value by 7%. Other European

countries recorded an increase in their

import value by 122% in 2011. As a

result, their import value rose from 4%

in 2010 to 9% in 2011.

D - Foreign Trade by Countries9

1. Exports:

The rise of exports, especially oil and

gas exports during 2011, has a posi-

tive effect on the volume of trade with

some of Yemen’s trade partners.

China ascended from the second to

the first rank of importers from Yemen,

where its relative share increased from

22% in 2010 to 32% in 2011, as a re-

sult of a rise in export value by 53%.

Chabter five

52

Thailand also ascended from the

seventh to the second position, where

its relative share rose from 4% in 2010

to 18% in 2011 due to an increase in

export value by 434% during

2011.India retreated from the first to

the third position because its relative

share fell from 34% in 2010 to 14% in

2011 and its export value shrinked by

57.5% in 2011. South Korea climbed

from the sixth to the fourth rank be-

cause its relative share rose from 4%

in 2010 to 8% in 2011 and its export

value went up by 98% in 2011. Saudi

Arabia maintained the fifth rank which

it occupied in 2010, although its rela-

tive share increased from 4% in 2010

to 6% in 2011 and its export value rose

by 57%. U.S.A. advanced from the

tenth to the sixth position, whereas its

share increased from 2% in 2010 to

4% in 2011 and its export value rose

by 114.5 %. U.A.E. retreated from the

fourth to the seventh rank, whereas its

relative share dropped from 6.2% in

2010 to 3.5% in 2011 and its export

value fell by 41% during 2011.

Exports by Economic Blocks (1)

(YR Billions)

% *2011 % 7424 Item

13.15 194.5 14.47 204.7 Arab Countries

10.09 149.2 11.38 161.0 GCC

3.06 45.3 3.09 43.7 Other Arab Countries

75.63 1,118.5 77.62 1,097.8 Non-Arab Asian Countries

0.46 6.8 0.42 5.9 Non-Arab African Countries

5.59 82.6 4.54 64.2 EC

0.39 5.7 0.03 0.4 Other European Countries

4.6 68.7 2.63 37.2 American Countries

4 0 0 0.3 Australia and Pacific

4 0 0 0 Unspecified

4.25 2.1 0.25 3.6 Others

100 1,478.8 100 1,414.1 Total

Source: Central Statistical Organization. 1 - Including Re-exports.

Imports by Economic Blocks

(YR Billions)

( % ) 2011 ( % ) 2010 Item

36.80 761.8 .6768 .4876 Arab Countries

33.10 685.1 .57.6 66578 GCC

7.64 .67. 4755 827. Other Arab Countries

77.54 46.76 527.. 25074 Non-Arab Asian Countries

2.45 5676 07.0 6475 Non-Arab African Countries

24.65 .5278 66706 .5.76 EC

8.5 66.76 47. 8.7. Other European Countries

24.76 55270 6570 54572 American Countries

2.09 4.73 57.. 4.76 Australia and Pacific

4.44 070 0.00 070 Unspecified

2.52 5675 1.38 5870 Miscellaneous

244 2,070.0 100 2,022.9 Total


Chabter five

51

2. Imports:

U.A.E maintained the first rank among

exporters to Yemen, although its relative

share decreased from 18% in 2010 to

16% in 2011 and its import value fell by

6.5% in 2011.

Saudi Arabia also maintained the second

position which it has occupied in 2010,

whereas its relative share increased from

8% in 2010 to 10% in 2011 and import

value rose by 31% in 2011.

Switzerland climbed from the ninth to the

third rank because its relative share in-

creased from 3% in 2010 to 8% in 2011

and import value rose by 162% in 2011.

Netherlands maintained the fourth rank

which it has occupied in 2010, whereas its

relative share increased from 5.8% in 2010

to 7.6% in 2011 and import value rose by

35% in 2011. China retreated from the third

to the fifth position, whereas its relative

share declined from 7% in 2010 to 6% in

2011 and import value fell by 15% in 2011.

U.S.A. retreated from the fifth to the sixth

rank, whereas its relative share decreased

slightly from 5.2% in 2010 to 4.9% in 2011

and import value declined by 3.5% in 2011.

India occupied the seventh position,

whereas its relative share increased from

3% in 2010 to 5% in 2011 and import value

rose by 54% in 2011.

Top Ten Importers (1)

(YR Billions)

Country 2010 % 2011 %

China .657. 55766 4.675 77.5

Thailand 2078 .726 5.676 27.7

India 4.27. ..766 50575 13.7

South Korea 607. 4756 6667. 8.1

Saudi Arabia 53.5 3.78 83.8 5.7

U.S.A 27.6 1.95 59.2 4.0

U.A.E 8.76 6750 2678 3.5

U.K 6078 07.6 5.76 1.9

Belgium 675 0706 5072 1.4

Japan 672 076. 6676 1.1

Total 1,089.3 77.03 1,331.1 90.04

Other Countries 324.8 22.97 147.. 10.0

Grand Total 1,414.1 244.44 1,478.8 244.44

1 including Re-exports

Top Ten Exporters

(YR Billions)

Country 2010 % 2011 %

U A E 357.7 17.68 334.3 16.1

Saudi Arabia 166.0 8.21 218.0 10.5

Switzerland 6676 .756 265.5 8.4

Holland 66676 27.6 246.8 6.5

China 64476 .765 277.6 4.8

U S A 60670 2754 247.7 5.8

India 6676 .702 84.4 4.6

Kuwait 857. 470. 74.7 5.2

Brazil 8.74 4765 66.7 7.6

Turkey 6.72 .764 58.7 2.4

Total 6.54.8 66768 2.526.2 68.5

Other Countries ..476 .87.5 547.7 72.4

Grand Total 5.0557. 600 7.464.4 244


Chabter five

central bank of yemen to article (57) of central bank of yemen law, i am pleased to submit ... mr....

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