increased in 2006 as a result of higher prices. Yemen was on an
IMF-supported structural adjustment program designed to modernize
and streamline the economy, which led to substantial foreign debt
relief and restructuring. However, government dedication to the
program waned in 2001 for political reasons. Yemen is struggling to
control excessive spending and rampant corruption. Yemen is
dependent on foreign aid to finance its budget deficits and
development projects. In November, Yemen secured $4.7 billion in
assistance from Arabian Gulf and Western donors.

Zambia
Despite progress in privatization and budgetary reform,
Zambia's economic growth in 2005-06 remained somewhat below the
6%-7% per year needed to reduce poverty significantly. Privatization
of government-owned copper mines relieved the government from
covering mammoth losses generated by the industry and greatly
improved the chances for copper mining to return to profitability
and spur economic growth. Copper output has increased steadily since
2004, due to higher copper prices and the opening of new mines. The
maize harvest was again good in 2005, helping boost GDP and
agricultural exports. Cooperation continues with international
bodies on programs to reduce poverty, including a new lending
arrangement with the IMF in the second quarter of 2004. A tighter
monetary policy will help cut inflation, but Zambia still has a
serious problem with high public debt.

Zimbabwe
The government of Zimbabwe faces a wide variety of
difficult economic problems as it struggles with an unsustainable
fiscal deficit, an overvalued exchange rate, soaring inflation, and
bare shelves. Its 1998-2002 involvement in the war in the Democratic
Republic of the Congo drained hundreds of millions of dollars from
the economy. The government's land reform program, characterized by
chaos and violence, has badly damaged the commercial farming sector,
the traditional source of exports and foreign exchange and the
provider of 400,000 jobs, turning Zimbabwe into a net importer of
food products. Badly needed support from the IMF has been suspended
because of the government's arrears on past loans, which it began
repaying in 2005. The official annual inflation rate rose from 32%
in 1998, to 133% in 2004, 585% in 2005, and approached 1000% in
2006, although private sector estimates put the figure much higher.
Meanwhile, the