Petroleum Subsidy Reform and Food Security: Yemen National Food Security Strategy

Abstract

The 2007-08 global fuel crisis was a stark reminder of the fact that petroleum subsidies strain public finances, distort markets, and provide only a blunt tool for improving food security and fighting poverty. As a consequence, several countries -- including Chile, Indonesia, Iran, and Syria -- have recently initiated petroleum subsidy reforms. Yemen, which has one of the highest subsidies and lowest per capita incomes in the world, is also considering phasing out its petroleum subsidies. In 2009, total petroleum subsidies in Yemen amounted to YER391 billion (US$1.93 billion), more than combined spending on health, education, and social protection; thus, reforming petroleum subsidies is increasingly seen as an opportunity for accelerating economic development and improving food security in Yemen. Figures.