## IMF Staff Concludes Staff Visit to Yemen

_IMF News, June 7, 2023_

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## Bibliographic details
- Published: June 7, 2023

---

### Mission context and timeline
- An IMF team, led by Joyce Wong, conducted a virtual and in-person mission in Amman, Jordan with the Yemeni authorities from May 25 to June 8.
- Discussions covered recent economic developments in Yemen, the outlook, and progress on key reforms.
- End-of-Mission press release issued June 7, 2023.  
- Views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

### Economic and humanitarian situation — key findings
- Humanitarian crisis: "17 million people are estimated to face acute food insecurity."
- UN pledging event outcome: raised only "US$1.2 billion of the US$4.3 billion needed" to address the crisis.
- Inflation: "food inflation averaging 45 percent in 2022."
- Domestic prices remain high despite a recent decline in global food and fuel prices.

### Fiscal developments and macroeconomic risks
- Attacks on oil export facilities in "October 2022" deprived the government of most of its revenues in foreign currency, "equivalent to about half of total revenues."
- Fiscal balance: the fiscal deficit widened to "2.5 percent of GDP in 2022."
- Outlook: "Without a resumption of oil exports, the deficit is expected to widen further in 2023, despite cuts in much needed expenditures."

### Monetary policy and exchange rate management
- Authorities constrained inflation by maintaining "zero growth in the monetary base."
- The weekly foreign exchange (FX) auction system:
  - Provides FX to finance essential imports in a transparent manner at market exchange rates.
  - Preserving the weekly FX auction system is identified as "key to constraining inflation and supporting exchange rate stability through the absorption of liquidity."

### Institutional reforms, governance, and data
- Ongoing institutional strengthening includes:
  - Improving expenditure control and budget planning.
  - Enhancing tax administration.
  - Improving financial reporting.
  - Adopting market exchange rates for customs revenues.
- Recommended governance and data actions:
  - Continue progress on financial reporting and finalizing outstanding audits to enhance central bank governance.
  - Further improvements in governance and addressing data gaps, particularly on external and domestic debt, are essential to enhance transparency and help catalyze additional financing.

### External financing, donor engagement, and IMF support
- External support is "urgently needed to alleviate financing pressures, reduce monetary financing, and safeguard hard-won exchange rate and price stability."
- The mission held extensive discussions with authorities and donors to better coordinate, prioritize, and sequence activities.
- IMF support commitments:
  - Continue to provide comprehensive technical assistance to Yemen to further enhance institutional capacities.
  - Encourage continued close donor engagement on capacity development, while increasing funding availability and agility of support.

### Policy recommendations and priorities
- Maintain reform momentum, including:
  - Push forward reforms in the electricity sector to reduce costs and increase revenue collection.
  - Preserve the weekly FX auction system.
  - Continue strengthening public financial management.
- Immediate efforts should focus on:
  - Continuing to strengthen public financial management.
  - Preserving the FX auction system.
  - Addressing data gaps on external and domestic debt.
  - Mobilizing additional external financing to safeguard gains and support reforms.

### Closing statement
- The mission expressed deep appreciation to the Yemeni authorities, technical staff, and all counterparts for their cooperation and candid discussions and looks forward to continued close engagement.

*Source: IMF Communications Department, June 7, 2023.*

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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/2023/06/07/pr23201-yemen-imf-staff-concludes-staff-visit_