Yemen close to $550m IMF loan deal
Sanaa, December 12, 2013
Yemen is close to a deal with the International Monetary Fund on a $550 million loan, the country's planning minister said.
A senior IMF official told Reuters last month that Yemen urgently needs budgetary support.
The nation came close to economic collapse after a popular uprising in 2011 that forced former President Ali Abdullah Saleh to step down.
"We expect to reach an agreement with the International Monetary Fund in early 2014 regarding a $550 million loan," minister Mohammed al-Saadi told Reuters on the sidelines of an investment conference in Kuwait.
Yemen's finances have been strained by frequent attacks on oil pipelines by disgruntled tribesmen. Crude exports provide up to 70 percent of government budget income.
The IMF expects Yemen's budget deficit to shrink to 5.8 percent of gross domestic product (GDP) this year from 6.3 percent in 2012, the biggest gap since 2009.
But its non-oil budget shortfall is set to deepen to 29.6 percent of GDP in 2013 from 28.2 percent in 2012.
Saadi also said that Yemen has received more than $2 billion of a $7.9 billion aid package pledged by international donors last year. That included a $1 billion central bank deposit by Saudi Arabia, he said.
The Saudi kingdom along with the neighbouring United Arab Emirates and Oman have also supplied Yemen with fuel in the past to cover the shortages.
Economic reforms will be a condition of any IMF loan and the Fund said that one of the measures the government was considering was the elimination of costly fuel subsidies.
"Fuel subsidies are a major problem for the budget," Saadi said, but added that any lifting of petrol subsidies in Yemen would require a national consensus. He did not give details.
Economic recovery in Yemen, the second-poorest Arab state after Mauritania, has accelerated this year. The IMF forecasts annual growth will quicken to 6.0 percent this year from 2.4 per cent in 2012. In 2011, when unrest gripped the country, the economy shrank 12.7 per cent.-Reuters