ICRR 10213
                                                                                             Report Number : ICRR10213
                    ICR Review
                    Operations Evaluation Department




1. Project Data :
             OEDID:
             OEDID :    C2840
         Project ID :   P041302
      Project Name :    Economic Recovery Credit
            Country :   Yemen
             Sector :   Other Non-sector Specific
       L/C Number :     C2840
  Partners involved :   None
       Prepared by :    David C. Greene (Consultant), OEDCR
      Reviewed by : R.J. Robinson
    Group Manager : Ruben Lamdany
       Date Posted : 08/10/1998

2. Project Objectives, Financing, Costs and Components :
The Economic Recovery Credit for US$ 80 million, approved in 1996, was the first adjustment operation in Yemen . It
was designed to establish the basis for resuming and sustaining economic growth by complementing the
Government's stabilization program and improving resource allocation . Specifically, it supported measures for trade
liberalization, privatization and public enterprise reform, and improvement of the regulatory framework . The program
would be accompanied by measures for social protection . A public works project was to be supported by IDA in a
separate operation.

3. Achievement of Relevant Objectives :
All the objectives of the project were achieved . A simplified, less protective tariff, with a maximum rate of 30% was
established and all import bans and export licenses were abolished . A privatization unit was established and sixteen
enterprises were sold or liquidated . The Government has announced its intention to privatize 100 enterprises by
2000. A system was established to monitor public enterprises and budgetary support for these enterprises is being
phased out. A policy of uniform treatment for investors had been adopted . Maintaining budgetary allocations for
health and education and successfully implementing the public works program mitigated the possible negative
impact of the program.

4. Significant Achievements :
The project demonstrates the benefits of close collaboration of the Bank, Fund and Government in program design .

5. Significant Shortcomings :
There were no significantly shortcomings .


6. Ratings :               ICR                     OED Review              Reason for Disagreement /Comments
              Outcome :    Highly Satisfactory     Highly Satisfactory
    Institutional Dev .:   Partial                 Modest
        Sustainability :   Likely                  Likely
   Bank Performance :      Highly Satisfactory     Highly Satisfactory
      Borrower Perf .:     Satisfactory            Satisfactory
       Quality of ICR :                            Satisfactory


7. Lessons of Broad Applicability :
The credit demonstrates the value of designing a program consistent with the Government's commitment and
institutional capacity and then following it up quickly with the next phase to sustain the momentum of reform .
Furthermore, in countries with weak institutional capacity, complementary technical assistance not only facilitates
coordination across various Ministries, but can also sustain the reform momentum .
8. Audit Recommended?      Yes    No

9. Comments on Quality of ICR :
The ICR is satisfactory.