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IMF approves US$369.8 mln aid package to Yemen
The International Monetary Fund (IMF) has approved a three-year Extended Credit Facility Arrangement for Yemen in the amount of US$369.8 million, the IMF said Monday in a news release.
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The IMF said that its Executive Board had approved the loan for Yemen to support the country's economic reform program. Yemen joined the IMF as a member in 1992.
"An initial disbursement equivalent to US$ 52.8 million is available to the Yemeni authorities immediately, with subsequent disbursements subject to semi-annual reviews. The goal of the authorities' economic program is to achieve high and sustained growth and reduce poverty", the IMF explained.
"Yemen is confronted with a range of difficult economic challenges related to its heavy dependence on declining oil revenues, widespread poverty, and water shortages. The global financial crisis has aggravated these challenges through a reduction in world oil prices, resulting in mounting macroeconomic imbalances".
The IMF added that Yemen was embarking on a three-year economic program that aims to achieve high and sustained growth and durable poverty reduction over the medium term.
"The program reinforces macroeconomic stability in the face of a difficult global environment and declining oil production. It puts public finances on a strengthened medium-term footing by combining fiscal consolidation with a restructuring of expenditures more toward capital and social outlays".
It pointed out that a comprehensive structural reform agenda will be needed to meet the objectives of the program.
"The reforms in the first year focus largely on tax policy. Priority reforms also include a strengthening of public financial management and financial sector development".
Yemen needs sustained growth to reduce poverty in the face of a rapidly growing population. The set of recent unfavorable economic and security developments, coupled with the projected decline in hydrocarbon output, pose challenges for macroeconomic stability and growth. Oil production is on a declining trend. .
The medium-term adjustment strategy will need to address the prospect of lower oil revenues while boosting public investment and social spending.
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