Yemen Trade Minister Sharaf Says Unrest Has Cost Country $4 Billion

Three months of protests against the government of President Ali Abdullah Saleh have cost Yemen $4 billion and a growing budget deficit threatens to destroy the country, Minister of Industry and Trade Hisham Sharaf said.

The budget gap for 2011 was projected at 4 percent of gross domestic product, or $1.7 billion, earlier this year, Sharaf said today in an interview. It’s now expected to reach 6.5 percent of GDP, or $3 billion, he said, because of the effects of the unrest and increased spending under a welfare package that was introduced in February to ease economic hardships in the Arab world’s poorest nation.

“We are talking about a deficit that will break the country,” Sharaf said at his home in Sana’a, the Yemeni capital. “This is our worst problem because it will affect other indicators, inflation, unemployment and the value of the currency. We are barely surviving, but we have not collapsed and will not collapse.”

The anti-government movement that began with small demonstrations in January and swelled into massive protests beginning on Feb. 11 has rocked the country. The protesters want Saleh, who has been in power since 1978, to step down.

Output per capita won’t expand this year as growth of 3 percent matches the increase in the population, Sharaf said. Before the demonstrations began, Yemen’s economy was forecast to grow 4.5 percent, he said.

Oil Exports

Sharaf said reports indicate that the direct and indirect losses to Yemen’s economy in the last three months will reach $4 billion, with the oil industry -- the country’s main source of hard currency -- the hardest hit.

Tribes opposing Saleh destroyed the pipeline that carries oil from Marib in central Yemen, forcing the government to import oil products for domestic use at a cost of $1.2 billion in the past three months, Sharaf said.

The only oil shipments from Yemen now come from the Masila fields in the east, where exports total 3 million barrels a month. Before the unrest, Yemen produced 5.8 million barrels of crude a month, Sharaf said. The country has lost $1 billion in the last three months as a result, he said.

“The rest is either sitting in our tanks or we’ve stopped the taps,” he said. “For us it’s a loss, because when we sell it, we use the revenue for employees’ salaries, provide the market with hard currency and finance government operations."

Roads from Marib have also been closed by opponents of Saleh’s regime, preventing the transport of cooking gas, Sharaf said. The government is paying $150 million to import butane gas, he said. Tourism, construction and investment have also taken hits from the unrest, he said.

‘‘There’s also our reputation,” Sharaf said. “You can’t calculate that by money.”

The government has reduced spending to a minimum to maintain inflation between 11 percent and 12 percent, he said.

To contact the reporter on this story: Donna Abu Nasr in Sana’a, Yemen, at dabunasr@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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