Aden ــ Yemen is facing an imminent economic collapse, with public debt now exceeding 100% of the country’s gross domestic product (GDP), according to a recent report by the International Monetary Fund (IMF). 

The warning comes amid deepening fiscal distress, prolonged conflict, and a fragmented institutional landscape that continues to undermine recovery efforts.

The IMF’s latest assessment, released in October 2025, paints a grim picture of Yemen’s macroeconomic outlook. The report highlights that years of war, disrupted revenue streams, and soaring inflation have pushed the country’s economy to the edge.

Public debt, once manageable, has ballooned due to unsustainable borrowing, currency depreciation, and declining oil exports—one of Yemen’s few remaining sources of hard currency.

The Fund noted that “Yemen’s debt-to-GDP ratio has crossed the critical 100% threshold,” a level typically associated with high risk of default and long-term economic stagnation. 

The report also warned that without urgent reforms and international financial support, the country could face a full-scale fiscal collapse, further worsening humanitarian conditions for millions of Yemenis.

The IMF urged both the internationally recognized government and de facto authorities to prioritize fiscal discipline, unify monetary policy, and restore central banking functions. It also called on donors to increase aid flows and support stabilization programs that can help rebuild Yemen’s economic institutions.

Yemen’s economic crisis is compounded by a severe liquidity crunch, widespread poverty, and a fractured banking sector. The World Bank and other international institutions have echoed similar concerns, warning that the country’s economic freefall could have long-term implications for regional stability.