## IMF Staff Concludes Visit on Yemen

_IMF News, July 19, 2019_

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## Bibliographic details
- Published: July 19, 2019

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### Humanitarian and economic impact
- "Conflict has crippled Yemen’s economy and pushed the country into a humanitarian crisis."
- "Some 17 million people in acute need of food aid and other forms of assistance."
- Sharp contraction in economic activity and hydrocarbon exports; wide suspension of basic public services.
- Public institutions, including the central bank, have been fragmented, contributing to coordination difficulties on import financing and nonpayment of salaries for many civil servants in areas outside government control.

### Mission, scope, and timing
- IMF team led by Koshy Mathai visited Amman during July 10-18, 2019, to meet with a Yemeni delegation including government and central bank representatives, and private-sector participants.
- End-of-Mission press release date: July 19, 2019.
- Press Release No. 19/290.
- Views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

### Macroeconomic developments and outlook
- Following the sharp output declines of 2014-17, growth has moved back into positive territory, albeit from a much lower per capita income level.
- Macroeconomic pressures have abated recently but remain considerable.
- Donor financing and increased hydrocarbon receipts were key factors in quelling last year’s dramatic volatility in the exchange rate and food prices.
- Basic food imports increased toward prewar levels, supported also by humanitarian aid.

### Fiscal position, financing needs, and policy priorities
- The government’s resumption of payments to a large number of workers and all pensioners in areas outside its control was welcomed as a step toward restoring household purchasing power.
- The IMF urges the government to pay all civil-service salaries throughout the country.
- Despite the expected increase in hydrocarbon revenues, the fiscal deficit will likely remain too large to be financed via non-inflationary means.
- Required policy responses and financing:
  - Additional donor financing is needed.
  - Enhanced revenue collection is needed.
  - Further expenditure prioritization and spending restraint while protecting priority spending, including transfers to the poor and salary payments across the country.
  - Additional financing to avoid resorting to central bank financing of the deficit and to support essential imports.
- "The IMF is very concerned about the humanitarian and economic costs of the conflict, and is working with donors to urgently finance basic imports and support the payment of public-sector wages and social assistance."

### Institutional capacity, reforms, and donor support
- The government prepared a national budget for 2019—the first in five years—enabled by progress in rebuilding its technical cadre and improving data collection and analysis.
- Further capacity building is needed and could be supported by donors in areas including:
  - Central bank operations and supervision.
  - The payments system.
  - Public financial management.
- Increased transparency and strengthened internal controls would help build confidence to catalyze donor financial support.
- It will be critical to overcome institutional fragmentation and harmonize policy implementation across the country.
- Strengthened supervisory capacity over the entire financial system is needed, including further promoting compliance with anti-money laundering and combating the financing of terrorism (AML/CFT) standards.
- Improvements in statistics, public financial management, and other areas would enhance absorption of donor capacity building and ensure harmonized upgrading of central bank systems across all branches.

### Closing statement
- "The mission team would like to thank the authorities for the frank policy dialogue and looks forward to continued close engagement."

*IMF Press Release No. 19/290, July 19, 2019.*

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## References

- [Republic of Yemen and the IMF](http://www.imf.org/external/country/YEM/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/07/19/pr19290-yemen-imf-staff-concludes-visit-on-yemen_