{ "title": "Yemen: Concluding Statement of the 2025 IMF Article IV Mission", "publication": "IMF News, October 9, 2025", "sourceUrl": "https://www.imf.org/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission", "canonical": "https://www.imf.org/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission", "overlayPath": "/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission/index.md", "summary": "The IMF welcomes the opportunity to resume Article IV consultations with Yemen after an 11-year hiatus. The conflict that began in 2014 halted a three-year Extended Credit Facility (ECF) arrangement, suspended the production of key economic indicators, and disrupted policymaking.", "publishDate": "2025-10-09", "sections": [ { "heading": "Overview", "content": "- The IMF resumed Article IV consultations with Yemen after an 11-year hiatus.\n- The 2014 conflict halted a three-year Extended Credit Facility (ECF) arrangement, suspended production of key economic indicators, and disrupted policymaking.\n- Renewed consultation reflects enhanced institutional capacity and improved data provision.\n- Yemen faces an acute humanitarian crisis and deep macroeconomic vulnerabilities; over half the population is in urgent need of humanitarian assistance." }, { "heading": "Economic conditions and recent developments", "content": "- Real GDP contracted by approximately 27 percent over the past decade.\n- Per capita income \"plummeted\" (qualitative description in source).\n- After the Houthis’ attacks on oil facilities halted oil exports in 2022, Yemen became an oil importer.\n- Government revenues declined from 22.5 percent of GDP in 2014 to below 12 percent in 2024.\n- Public debt surged to over 100 percent of Internationally Recognized Government (IRG) GDP, with arrears accumulating to most external creditors.\n- Current account deficit expanded from 2.1 percent of GDP in 2014 to almost 11 percent of GDP by 2024.\n- International reserve coverage declined to less than one month of imports.\n- Saudi Arabia provided about $2 billion over 2023–24 in financial support.\n- 2024: GDP contracted by 1.5 percent.\n- Inflation hit 27 percent in 2024 and rose above 35 percent year-on-year by July 2025.\n- Yemeni rial weakened by 30 percent since the beginning of 2025 (through July), prompting FX stabilization measures in August by the IRG.\n- Current account deficit improved from 40.6 percent of GDP in 2022 to an average of 14.5 percent over 2023–24, driven by import compression, robust remittances, and bilateral grants.\n- Staff project a moderate GDP contraction of 0.5 percent in 2025.\n- Outlook assumes inflation eases later in 2025 as the Yemeni rial has appreciated and stabilized in response to FX measures adopted in August 2025." }, { "heading": "Policy response since 2022", "content": "- Significant fiscal adjustment:\n - Government revenues fell by more than 8 percentage points of GDP since 2022 due to halted oil exports, trade shifting to northern ports, rising smuggling, and governorates unduly retaining central government revenue.\n - Government spending was reduced by 5.4 percentage points of GDP.\n - With strong Saudi grant support, the deficit dropped by over 10 percentage points of GDP since 2022, reaching 1.9 percent of GDP in 2024.\n - Government financing relied mainly on Treasury overdrafts; the Central Bank of Yemen (CBY) sterilized these primarily using Saudi deposits to sell foreign exchange (FX) reserves and control money supply growth and inflation.\n- FX management and controls in 2025:\n - National Committee for the Regulation and Financing of Imports (NCRFI) established in July 2025 to enhance import transparency and channel FX into the formal banking sector.\n - Temporary measures: limits on foreign currency exchanges; prohibition on using foreign currency for local transactions; revocation of licenses for money exchangers suspected of currency manipulation.\n - These measures coincided with a notable appreciation and stabilization of the Yemeni rial and contributed to lowering inflation." }, { "heading": "Outlook and risks", "content": "- Medium-term growth projection:\n - Growth expected to gradually increase from 0.5 percent in 2026 to approximately 2.5 percent by 2030.\n - Drivers: rising non-oil exports, remittances, and production of refined oil products for electricity generation and consumption; Agriculture Plan and accelerated execution of development projects.\n- Inflation outlook:\n - Expected to ease further, aided by lower global food and oil prices and strictly limited monetary financing.\n- Key downside risks:\n - Domestic: renewed internal conflict, social unrest from economic precarity, hindering reforms and destabilizing the economy.\n - External: rising global commodity prices causing currency depreciation and inflation; decreased grant support leading to budget shortfalls, further import compression, and worsened humanitarian conditions.\n- Contingency needs:\n - If adverse risks materialize, authorities should intensify revenue mobilization and spending rationalization.\n - Due to minimal reserves and a challenging humanitarian context, additional international support would be required to address significant adverse scenarios." }, { "heading": "Policy priorities and recommendations", "content": "- Fiscal sustainability and revenue integrity:\n - Link expenditure authorizations to timely revenue remittances by governorates starting in 2026.\n - Improve port oversight, unify and remit taxes and customs duties by governorates, and integrate revenue institutions.\n - Implement the Short-Term Emergency Revenue Plan (created with IMF support).\n - High-impact tax policy measures: value customs at market exchange rates, update customs duties, and improve compliance.\n- Expenditure optimization and public financial management:\n - Strategically streamline expenditures through upstream consultation during budget planning; reallocate funds to priority areas; cut inefficiencies; safeguard essential services.\n - Reduce electricity subsidies by gradually aligning tariffs with costs while ensuring social protection for lifeline users.\n - Improve bill collection; discontinue unfavorable Purchasing Power Agreements; tackle corruption.\n - Implement rigorous expenditure controls across IRG governorates; enhance cash management; improve fiscal transparency by digitalizing tax administration; address payroll irregularities to contain the wage bill.\n- Unlocking additional financing and creditor engagement:\n - External financing is essential to sustain government operations, maintain critical public services, avert deeper humanitarian deterioration, and support exchange rate stability.\n - The $368 million Saudi financing package announced in September 2025 for budget, energy, and health support, plus support from the United Arab Emirates, is a positive step and may attract additional aid if IRG policy efforts continue.\n - Public debt remains unsustainable at over 100 percent of IRG GDP as of mid-2025, underscoring the need for comprehensive creditor negotiations to restore debt sustainability.\n- Central Bank of Yemen (CBY) priorities:\n - Maintain focus on controlling inflation, upholding a market-driven exchange rate, and ensuring financial integrity.\n - Continue limiting monetary financing of fiscal deficits and sterilizing excess liquidity through the sale of FX assets; discontinuing monetary financing is necessary for price stability given critically low official reserves.\n - Ensure the rate used for imports by the NCRFI remains closely aligned with the market rate to prevent distortions; further assessment is needed regarding alignment with Article VIII of the IMF’s Articles of Agreement.\n - Expand financial sector oversight to cover all deposit-taking institutions to bring liquidity to the banking sector and reduce financial stability risks.\n - Strengthen bank supervision, know-your-customer practices, and close monitoring of Houthi-linked transactions following the United States' designation of the Houthis as a Foreign Terrorist Organization (FTO) in early 2025, which prompted major banks to relocate their headquarters to Aden." }, { "heading": "Structural reforms for medium-term recovery", "content": "- Strengthen institutions to improve governance and investor confidence.\n- Implement stricter AML/CFT policies; improve fiscal management via expenditure controls, a treasury single account, and enhanced tax and customs transparency and accountability.\n- Reduce barriers to business activity and facilitate exports to support job creation.\n- Electricity sector reforms: build out renewable energies and enhance the grid for transmission and distribution to improve access and service delivery.\n- Reforms are contingent on political stabilization and external support and are vital for economic recovery, social cohesion, and improved well-being." }, { "heading": "Closing", "content": "- The mission welcomes the IRG’s Economic Recovery Plan (ERP) emphasis on public finance sustainability, controlling inflation, and strengthening governance and institutions.\n- Additional external financial support remains crucial as Yemen navigates this critical phase.\n- The mission thanks the Yemeni authorities and various stakeholders for their cooperation and candid discussions.\n\nConcluding statement: IMF Communications Department, October 9, 2025.\n\n---\n\n\n References\n\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission" } ], "bullets": [ "[Markdown version](/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission/index.md)", "[Structured JSON version](/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission/index.json)", "[Bundle manifest](/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission/bundle-manifest.json)", "Published: October 9, 2025", "The IMF resumed Article IV consultations with Yemen after an 11-year hiatus.", "The 2014 conflict halted a three-year Extended Credit Facility (ECF) arrangement, suspended production of key economic indicators, and disrupted policymaking.", "Renewed consultation reflects enhanced institutional capacity and improved data provision.", "Yemen faces an acute humanitarian crisis and deep macroeconomic vulnerabilities; over half the population is in urgent need of humanitarian assistance.", "Real GDP contracted by approximately 27 percent over the past decade.", "Per capita income \"plummeted\" (qualitative description in source).", "After the Houthis’ attacks on oil facilities halted oil exports in 2022, Yemen became an oil importer.", "Government revenues declined from 22.5 percent of GDP in 2014 to below 12 percent in 2024.", "Public debt surged to over 100 percent of Internationally Recognized Government (IRG) GDP, with arrears accumulating to most external creditors.", "Current account deficit expanded from 2.1 percent of GDP in 2014 to almost 11 percent of GDP by 2024.", "International reserve coverage declined to less than one month of imports.", "Saudi Arabia provided about $2 billion over 2023–24 in financial support.", "2024: GDP contracted by 1.5 percent.", "Inflation hit 27 percent in 2024 and rose above 35 percent year-on-year by July 2025.", "Yemeni rial weakened by 30 percent since the beginning of 2025 (through July), prompting FX stabilization measures in August by the IRG.", "Current account deficit improved from 40.6 percent of GDP in 2022 to an average of 14.5 percent over 2023–24, driven by import compression, robust remittances, and bilateral grants.", "Staff project a moderate GDP contraction of 0.5 percent in 2025.", "Outlook assumes inflation eases later in 2025 as the Yemeni rial has appreciated and stabilized in response to FX measures adopted in August 2025.", "Significant fiscal adjustment:", "FX management and controls in 2025:", "Medium-term growth projection:", "Inflation outlook:", "Key downside risks:", "Contingency needs:", "Fiscal sustainability and revenue integrity:", "Expenditure optimization and public financial management:", "Unlocking additional financing and creditor engagement:", "Central Bank of Yemen (CBY) priorities:", "Strengthen institutions to improve governance and investor confidence.", "Implement stricter AML/CFT policies; improve fiscal management via expenditure controls, a treasury single account, and enhanced tax and customs transparency and accountability.", "Reduce barriers to business activity and facilitate exports to support job creation.", "Electricity sector reforms: build out renewable energies and enhance the grid for transmission and distribution to improve access and service delivery.", "Reforms are contingent on political stabilization and external support and are vital for economic recovery, social cohesion, and improved well-being.", "The mission welcomes the IRG’s Economic Recovery Plan (ERP) emphasis on public finance sustainability, controlling inflation, and strengthening governance and institutions.", "Additional external financial support remains crucial as Yemen navigates this critical phase.", "The mission thanks the Yemeni authorities and various stakeholders for their cooperation and candid discussions.", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission/index.md", "json": "/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission/index.json", "bundleManifest": "/en/news/articles/2025/10/09/imf-cs-yemen-2025-imf-article-iv-mission/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T04:10:57.133Z" }