However, the IMF report also stressed the need for the government to implement plans for the expansion of the tax base, the reduction of subsidies and widespread civil service reforms. 'Consistent with its intention to make 2002 'the year of civil service reform'.[planned measures] will include the issuance of biometric cards to government employees to help identify ghost workers and double dippers, [and] the retirement of remaining overage civil servants,' says the IMF report.

The IMF also calls for the implementation of the general sales tax - which became law earlier this year - and notes that the privatisation programme has resumed, though the sale of the larger assets such as National Bank of Yemen, the Aden oil refinery and state-owned cement factories continues to lie at the centre of an ongoing policy debate.

The report suggests that the macroeconomic outlook is positive. Real gross domestic product (GDP) growth of 3.3 per cent was posted last year and further growth of 4.1 per cent is forecast for 2002. External public debt is projected to trend down marginally to 54 per cent of GDP, the current account will remain positive for the fourth consecutive year and a budgetary surplus is expected for the third consecutive year.