IMF Management Approves a Staff-Monitored Program with Yemen

IMF News, October 7, 2026

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IMF Management approved an 18-month non-financing Staff-Monitored Program (SMP) with Yemen to consolidate recent economic stabilization gains, strengthen policy frameworks, and enhance institutional capacity.
The SMP seeks to preserve macroeconomic stability amid the war in the Middle East, reinforce fiscal discipline, maintain a prudent monetary policy stance while protecting the most vulnerable, strengthen institutional capacity, and enhance data quality.
Staff Monitored Programs (SMPs) are informal agreements between national authorities and IMF staff and do not entail endorsement by the IMF Executive Board. SMP staff reports are issued to the Board for information.

Real GDP is projected to contract for a fifth consecutive year, declining by 1.5 percent in 2026, reflecting deteriorating terms of trade linked to the conflict in the Middle East, persistent energy shortages, and weak domestic demand.
Activity is expected to stabilize in 2027 assuming a more favorable external environment and a gradual recovery in domestic demand.
The external position remains heavily reliant on sustained remittance inflows and donor assistance to finance a largely humanitarian-driven import bill.
The current account deficit is projected at around 3.3 percent of GDP in 2026.
International reserve coverage is projected to stay below adequate levels.
Yemen’s fragile debt dynamics and constrained access to external financing continue to require substantial international support in the near term.

The SMP seeks to strengthen public finances during 2026–27 by focusing fiscal consolidation primarily on strengthening domestic revenue mobilization and prioritizing essential spending.
Key fiscal measures and priorities:
- Mobilize additional revenues through enhanced tax compliance and customs administration.
- Prioritize spending necessary for government operations, to support demand, and to ease the acute humanitarian crisis.
- Strengthen public resource management and transparency by consolidating government accounts and improving spending efficiency.
Improvements in tax and customs administration, coupled with increased Saudi budget support, are expected to significantly narrow the fiscal deficit.

Monetary and exchange rate policies under the SMP are designed to preserve price stability and bolster external resilience.
Monetary policy implementation will be anchored by clear quantitative targets, including limits on central bank financing of the budget.
A market-determined exchange rate will act as a shock absorber and protect external buffers.
Strengthening financial sector intermediation and integrity is a key pillar of the program.
- The authorities have committed to implementing risk-based supervision for anti-money laundering and combating the financing of terrorism (AML/CFT).

The SMP seeks to support the authorities’ efforts to restore core services and reinforce social protection for the most vulnerable.
Key structural and social measures:
- Adoption of a phased plan to reform the electricity sector, starting with a gradual increase in cost recovery.
- Protect social spending and lay the foundations for rebuilding a targeted social protection system.

Sustained implementation of the SMP would help:
- Reinforce policy credibility.
- Strengthen Yemen’s fiscal and external positions.
- Create conditions for substantive engagement with international partners on comprehensive debt restructuring.
- Lay the foundations for stronger, more sustainable, and inclusive growth.