Published: September 3, 2014
Unstable Arab country receives much-needed assistance.
The Republic of Yemen has secured a three-year, SDR365.2mn (US$552.9mn) extended credit facility from the IMF to help promote macroeconomic stability and encourage inclusive growth. US$73.8mn will be doled out immediately, with the remainder disbursed in semi-annual instalments subject to six stages of review.
Naoyuki Shinohara, deputy managing director and acting chair of the IMF, said of the loan: “The Yemeni authorities have made commendable efforts to support macroeconomic stability and growth. Nonetheless, political and security challenges have continued to weigh on the policy environment and economic outcomes. In particular, fiscal and external balances have weakened due to delays in key reforms and increased sabotage of oil facilities. Looking ahead, the main challenges are to improve the fiscal and external positions, as well as support inclusive growth and job creation.”
The disbursement of funds is contingent on the government phasing out its expensive fuel subsidy programme, reforming the civil service and improving tax take. These measures are to be carried out in conjunction with targeted social transfers to the poor.
With a poverty rate of 54% and youth unemployment of 45%, Yemen has become a breeding ground for terrorist group Al Qaeda in the Arabian Peninsula. Oil production – the country’s main economic driver – has declined in 2014 due to acts of sabotage, resulting in severe electricity and fuel shortages.