Since independence, Yemen has been ruled by one party, the General People's Congress (GPC), which holds an absolute majority in parliament. The party is liberal and committed to reform. The emerging multiparty political system coexists with a feudal tribal system, and suffers from a legacy of deeply embedded rivalry between the north and the south. Until its unification with North Yemen, a Marxist-oriented government dominated South Yemen, and its economy was in ruins at the time of unification. For the first 3 years after unification in 1990, the country was governed by a transitional legal code under which the government was a hybrid of the pre-unification cabinets and parliaments of North and South Yemen. Before the 1994 civil war, the Marxist Yemeni Socialist Party ruled South Yemen. Its role diminished greatly after its leaders were sent into exile by the northern government as a pre-condition for peace.
Following the marginalization of the Socialist Party, the government was able to launch an economic reform program in 1995, which was formally endorsed by the IMF in 1997. The program stipulated deep spending cuts and the privatization of numerous state-owned facilities, including the National Bank of Yemen, the Yemen Cement Company, and Yemenia airlines, among other state-owned enterprises. It also aimed at keeping inflation levels low and encouraging foreign investment in the country. Although some progress has been achieved in the areas of cost-cutting and expanding the government's revenue base, the overall performance of the economy has been rather weak.
Taxes are an insignificant source of government revenue. As a result of the reform program, however, the government has attempted to improve its tax revenue collection system by computerizing its customs clearance at ports and airports. The government, however, has been largely reluctant to reform the income tax system in line with the IMF's recommendations. These efforts have been complicated by economic and political uncertainties, such as high unemployment rates, widespread poverty, and a high incidence of political violence. As a result, dependence on the oil sector for revenue is likely to persist.