IMF approves $93.75m aid for Yemen
Sanaa, April 7, 2012
The International Monetary Fund (IMF) said its executive board has approved funds worth SDR 60.875 million (about $93.75 million) for Yemen under the Rapid Credit Facility (RCF) to address its urgent balance of payments needs.
The approval allows for the immediate disbursement of the full amount, which represents 25 per cent of Yemen’s quota in the IMF, to support the country’s economic recovery program following a prolonged political crisis.
The executive board also took note of the authorities’ cancellation of the arrangement under the Extended Credit Facility (ECF), which was approved on July 30, 2010. That arrangement went off track during the country’s political crisis, said the IMF.
Nemat Shafik, the deputy managing director and acting chair, said, "A year long political crisis and civil unrest has taken a serious toll on the Yemeni economy, endangering the humanitarian situation. Economic activity fell sharply in 2011 on the back of deteriorated security, fuel shortages, and lack of bank financing."
"Damage to a key pipeline, which carries one-third of the country’s oil production, has exacerbated the situation, prompting the government to compress public investment. Economic recovery is expected to be slow," said Shafik.
“Yemen is also facing major economic challenges that require significant structural reforms, particularly to facilitate a smooth adjustment to declining oil production. Bolstering medium-term prospects for non-hydrocarbon growth is critical to reduce the very high unemployment and poverty levels," he added.
According to him, the fund-supported program will help the authorities tackle pressing economic challenges while giving them time to formulate their medium-term strategy to address structural issues.-TradeArabia News Service