Sana’a: The Yemeni government has turned its back to international pressure by announcing that it was not thinking of lifting fuel subsidies “for the time being”.

Fearing possible unrest, the government said that it was considering other alternatives to face the ongoing economic crisis.

“The government is not intending to increase the prices of fuel for the time being,” said a statement carried by the official news agency.

The UK ambassador to Yemen, Jane Marriott, said in a recent interview with Gulf News that lifting fuel subsidies would bring many benefits to the Yemeni economy which include receiving more aid from the World Bank and controlling fuel smuggling.

“The World Bank can free out about $2.5 billion (Dh9.175 billion) every year.” Marriott said.

The news about possible fuel hike spread across the country early this month when a group of businessmen urged the Yemen president Abd Rabbo Mansour Hadi to consider the option of lifting fuel subsidies to bridge the budget deficit. The country is also experiencing acute fuel shortage which forced thousands of cars to queue outside oil stations.

Yemen economists warned that lifting the subsidies will take food prices through the roof which will have a “disastrous” impact on the poor.

Saif Al Asali, a professor of economics at Sana’a University and a former minister of finance, said in an interview with Maeen TV that lifting fuel subsidies will have no great positive impact on the economy.

“The country is going through a constitutional, administrative, legitimacy and political vacuum. We have tried this measure in the past and got nothing. The savings were used for buying off alliances and were poured into the maw of the corrupt.”

In the interview, Al Asali speculated that the current government would not survive more than a year if it continues with its current economic policies.

“There is a huge public debt, big deficit and plummeting currency reserves”.

The deficit of the 2014 budget is estimated 679 billion Yemeni riyal (Dh11.7b) and the foreign currency reserves slipped to $5.23 billion (Dh19.2 billion) in January.

On the contrary, the head of Yemen Centre for Strategic Centre, Mohammad Al Afandi, said that Al Asali has exaggerated the gravity of the current economic situation in Yemen.

Al Afandi told Al Khabar news agency that the priority in the transitional process is resorting security and stability.

“Without political and security stability, the economic sector will never recover.”

As with many other hot issues, rival political parties argued over who proposed the idea of lifting the subsidies.

The party of the former president Ali Abdullah Saleh accused the Islamist Islah party of pressuring the government to lift fuel subsidies, a measure that Islamists strongly opposed when they were in the opposition in 2005.

The current prime minister Mohammad Salem Basindwa and the minister of finance Sakher Al Wajeeh were among the leading politicians who revolted against the former regime in 2011. But Islah denied the accusation.

Riot broke out across the country in 2005 when the government lifted fuel subsidies, increasing the prices of food and transportation.