This 2007 Article IV Consultation highlights that despite recent progress in poverty reduction, Yemen remains far from achieving the Millennium Development Goals. Oil production has been declining since 2000, and in the absence of major discoveries, proven oil reserves could be depleted in some 10 years' time. Economic performance in 2006 was generally favorable, but was accompanied by an increase in inflation. Overall real GDP growth reached 4 percent in 2006, with a 6 percent non-oil growth offsetting an 8 percent decline in oil production.


This 2007 Article IV Consultation highlights that despite recent progress in poverty reduction, Yemen remains far from achieving the Millennium Development Goals. Oil production has been declining since 2000, and in the absence of major discoveries, proven oil reserves could be depleted in some 10 years' time. Economic performance in 2006 was generally favorable, but was accompanied by an increase in inflation. Overall real GDP growth reached 4 percent in 2006, with a 6 percent non-oil growth offsetting an 8 percent decline in oil production.

Annex I. Republic of Yemen: Fund Relations

(As of July 31, 2007)

I. Membership Status: Joined May 22, 1990 and has Article VIII status.

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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VI. Projected Payments to Fund:12

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VI. Safeguards Assessment:

Under the Fund’s safeguards assessment policy, the Central Bank of Yemen (CBY) was subject to the transitional procedures with respect to the EFF arrangement which expired on October 28, 2001. The assessment, which was completed on May 23, 2001, concluded that CBY’s external audit mechanism was not fully adequate at the time, and recommendations were made to address the shortcomings. The CBY has submitted assessment letters and its audited financial statements up to 2006.

VIII. Exchange Arrangements:

The currency of Yemen is the Yemeni rial. The Yemeni authorities maintain that the current exchange rate system is a free float. However, staff are of the view that the exchange rate system is a facto crawling peg, in which the rate of crawl has recently slowed to resemble a conventional peg. Accordingly, under the IMF’s classification, Yemen is currently considered a de facto conventional peg.

Yemen has accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Articles of Agreement and maintains an exchange system that is free of multiple currency practices and restrictions on the making of payments and transfers for current international transactions. In accordance with UN Security Council Resolutions, Yemen has taken measures to block the accounts of certain individuals and organizations and has notified the Fund of these measures in accordance with Decision 144.

IX. Article IV Consultation:

The latest Article IV consultation was concluded on June 2, 2006. Yemen is on the standard 12-month consultation cycle.

X. FSAP Participation:

FSAP (with the World Bank), October-November 2000.

XI. Technical Assistance:


XIII. Resident Representatives:


Annex II. Republic of Yemen: World Bank Relations

A. Partnership in Yemen’s Development Strategy

1. Relations between the World Bank and the Government of Yemen are close and continue to cover knowledge and lending services in sectors critical to development and poverty reduction. The Bank’s Board of Directors discussed the 2006-2009 Country Assistance Strategy (CAS) for Yemen in June 2006. This CAS was prepared after extensive consultations with central and local government officials, civil society, private sector and other donors. It also benefited from the Government’s Progress Report for the first two years of implementation of the First Poverty Reduction Strategy Paper (2003-2005) as well as the 2006 Country Assistance Evaluation prepared by the Independent Evaluation Group of the World Bank.

2. The CAS is based on four pillars: (a) increasing non-oil growth; (b) improving human development outcomes; (c) improving fiscal sustainability; and (d) addressing the resource sustainability crisis. During the CAS period, IDA intends to provide about $100 million annually in credits to Yemen through a selective program of lending operations complemented by a strategic program of analytical and learning services. Given the relatively limited amount of IDA resources available to Yemen, the Bank’s larger contribution comes from its catalytic role in leveraging donors’ resources, providing technical assistance to the Government and working with other donors to mainstream new implementation approaches that can enhance sectoral performance.

3. In mid-November 2006, the World Bank co-chaired with the Yemen’s Government a Consultative Group (CG) meeting hosted by the UK Department of International Development, and sponsored by the Gulf Cooperation. The CG was attended by senior officials from 39 countries and international development agencies, and a total amount of US$4.7 billion were pledged to finance Yemen’s development for the four year period 2007-2010. The pledge represented over 85 percent of the Government’s estimated external financing needs.

4. As part of the CAS, the International Finance Corporation (IFC), the private sector arm of the World Bank Group, is supporting the development of the private sector in Yemen through investments and technical assistance activities. The IFC focuses on enhancing competitiveness of the private sector, further deepening the financial sector, promoting investments in areas newly opened for private sector participation, encouraging sustainable social and environmental development, and promoting good corporate governance.

B. Status of the World Bank Portfolio

5. IDA. As of March 31, 2007, IDA had approved 136 projects for Yemen, valued at about US$2.3 billion (excluding grants and cancellations), of which about US$2.0 billion have been disbursed. The current portfolio has 18 active projects with a total net commitment of about US$748 million, of which US$447 million are undisbursed. The sectoral composition (by value) of the current portfolio is as follows: 50 percent for infrastructure projects, 17 percent for agriculture, 17 percent for education, 12 percent for health/social protection, and 4 percent for public sector governance. Over the last two years, portfolio performance has remained stable—disbursement ratio has so far reached 21 percent and is expected to rise to about 26 percent by the end of FY07. Out of 18 projects in the portfolio, only one project is rated problematic for issues on financial management. Recent actions taken, including project management changes, are expected to address the issues affecting that project.

6. IFC. In response to Government of Yemen’s efforts in opening certain industries to private participation, IFC has recently increased its investment operations in the country with two relatively large investments in FY06, and has a strong pipeline in FY07, including Trade Finance lines for commercial banks. In FY06, IFC committed US$60 million with two projects (US$35 million in the HSA National Cement Company, a green-field cement plant and a US$25 million investment in SOCO, an oil and gas project). In FY07, IFC already committed US$20 million for the Saudi German Hospital and US$10 million for a trade finance line with the Saba Islamic Bank. IFC is focusing on working with strong local private groups in Yemen, in particular, on the underdeveloped financial sector, banking, leasing, trade finance and selected industries.

7. Relation with the Multilateral Investment Guarantee Agency (MIGA): Currently, MIGA does not have any activities in Yemen. However, the ministry of planning and international cooperation has recently requested assistance to review its institutional framework for investment promotion. In response, FIAS/MIGA is planning a rapid diagnostic assessment of the overall investment promotion institutional arrangements in Yemen with a view to offering recommendations for the rationalization of roles, mandates and functions in this important strategic area of activity.

Annex III. Republic of Yemen: Statistical Issues

1. Delays in reporting and data weaknesses persist, and in some cases are getting worse; but data is still adequate to conduct surveillance. Due to shortcomings in most data, a broad effort is in place to improve data compilation with technical assistance from the Fund and other donors. In particular, national accounts data should be a priority for reform and improvement.

2. The Republic of Yemen has participated in the General Data Dissemination System (GDDS) since April 26, 2001. While some progress has been made, scope remains to improve the collection and dissemination of economic statistics, in line with Yemen’s commitments under the GDDS.

3. The most reliable and timely data are those on the monetary sector produced by the Central Bank of Yemen (CBY). The CBY disseminates data on total official reserve assets and monetary statistics with a lag of one month. To strengthen monetary statistics further, a multisector mission in August 2000 recommended that: (a) repurchase agreements be treated as collateralized loans; (b) all nonstandard loans be reclassified as claims on the relevant sector; (c) counterparty for several monetary accounts be more accurately identified; and (d) a number of monetary accounts be disaggregated so as to present position on a single financial instrument. In June 2003, the authorities began reporting to STA a more disaggregated set of data that allowed for improved sectoral and instrument classification. Publication of the revised monetary statistics for December 1999 and onward, based on the more detailed data reporting, began in the August 2003 issue of IFS. In March 2007, with the availability of more detailed data, the definition of broad money was broadened to include the deposits of the pension funds, starting with data for December 1999. CBY does not yet report monetary data to STA using Standardized Report Forms (SRFs).

4. Although important progress has been achieved in terms of coverage, classification, and compilation methods of national accounts in accordance with the System of National Accounts 1993 (1993 SNA), significant work remains to be done to improve data quality and compilation methods. Based on technical assistance provided by STA and METAC in real sector statistics from September 2001 to November 2006, the Central Statistics Office (CSO) has compiled national accounts statistics for the years 1999-2005 that include: current accounts and the capital account by institutional sector; goods and services account and the integrated economic accounts for the total economy; and supply and use tables (SUT). The compilation of the SUT for 2004 is well underway. Most of the production and expenditure estimates are now based on direct methods that mainly use the results of recently conducted surveys, albeit with considerable lags. Quarterly establishment sample surveys to provide short-term indicators for moving annual benchmark series are underway and may be implemented in 2008. A household expenditure and income survey was conducted in 2005, and the results are expected to improve estimates of household final consumption and update the weights of the CPI. Additional work is needed to ensure the accuracy and the speed of collecting and processing survey results, to conduct new surveys in areas uncovered, to better identify the informal sector and the unorganized units and to update survey samples to improve coverage. There is also a need to develop short-term indicators for both current and constant prices, and to apply the 1993 SNA framework consistently for all published national accounts data.

5. Regarding price statistics, some improvements have been made in the compilation of the consumer price index and the production of foreign trade price indices. METAC is currently assisting the CSO in developing a producer price index (PPI), however there has been no agreement on a specific action plan in this area. With the assistance of STA, the CSO has constructed a CPI that is consistent with international standards, with weights derived from the 1998 Households Budget Survey (HBS). The CPI has a broad geographic coverage and a sufficient number of consumption items, although some deficiencies remain in data collection practices. STA real sector missions have recommended further improving the sources of data in general, expanding the price statistics to cover different areas, and enhancing training and internal coordination within the CSO. CSO staff are currently working on updating the weights of the CPI basket to reflect the results of the 2005 HBS, and are considering reducing the number of commodities in the basket from the current coverage of 900 goods in the basket. To address problems in the field, the CSO has introduced a new framework to ensure consistency in data collection according to the following criteria: timing, good specifications, and location.

6. Fiscal data reliability and timeliness remain weak—particularly for detailed revenue, expenditure and financing items despite the provision of substantial technical assistance from several international agencies to improve the source data, the accounting and budgeting frameworks and information systems, and compilation methods. There are also discrepancies between reported budget data and below-the-line financing data obtained from the monetary statistics and CBY’s BOP data. Fiscal data dissemination is limited to the hardcopy publication of the quarterly Bulletin of Government Finance Statistics (Bulletin), which provides annual, quarterly, and monthly data with significant lags. The authorities have not reported data for publication in the Government Finance Statistics Yearbook from 2000 onwards, and the latest data are estimates for 1999. No sub-annual data are reported for publication in International Financial Statistics. The GFS mission which visited Sana’a in January 2004 found that the available statistics, while disseminated with greater coverage and detail than previously, continued to suffer from numerous departures from international standards in classification and coverage. The mission encouraged the authorities to enhance the Bulletin of Government Finance Statistics with additional information on financing and on debt. The mission also recommended that the authorities expand their data dissemination by communicating the Bulletin, or the relevant data therein, to the IMF Statistics Department for re-dissemination and for the purpose of renewing the dialogue and remote technical assistance for the development of their GFS. Fiscal data based on the 2001 GFSM methodology have been compiled but have not been widely disseminated.

7. The CBY is responsible for compiling and disseminating balance of payments statistics, and more recently, the international investment position (IIP) statistics based on the IMF’s Balance of Payments Manual, fifth edition. Compilation tasks are performed on a rather ad hoc basis, mostly relying on survey-based questionnaires with a response rate that is generally poor. The quality of the questionnaires themselves is also weak due to the limited expertise and experience in developing such material. Further compounding the weak quality of the statistics are inadequacies in documented sources and methods, and the limited financial and material resources dedicated to balance of payments compilation. The CBY publishes quarterly external debt statistics within one quarter of the reference period for the banking sector, general government, and monetary authority. Successive STA balance of payments statistics missions (2002, 2003, and 2005) have sought to facilitate implementation of the action plan recommended by the IMF’s resident advisor on balance of payments statistics (1998-2000), with only limited success. Coverage of the oil and gas industry transactions remains weak. Data questionnaires on FDI and selected items in services have either been discontinued or not followed up. The shortage of qualified staff dedicated to the compilation as well as weak coordination between the CBY and other government agencies (such as the customs authority, the CSO, and the ministry of oil and mining resources) are partly responsible for the slow progress. STA missions have consistently called for better coordination between the CBY and other government agencies for timely and effective data collection and compilation, improved staffing and training, and the reinstitution of discontinued surveys. A balance of payments mission in September 2005 found that the CBY had made some progress on increasing manpower and equipment in the balance of payments division, as well as training through the AMF. The mission also focused on the present method of estimating inward worker’s remittances. Yemen has submitted quarterly balance of payments data to STA until end-2006, although the latest data published in the IFS and Balance of Payments Statistics Yearbook (BOPSY) relate to end-2005. Quarterly IIP data has also been supplied to STA for 2003 and 2004.

Table of Common Indicators Required for Surveillance

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).

Annex IV. Technical Assistance Program3

  1. IMF

    • FAD—Pension Reform, August 2001

    • FAD—Reform of the Budgetary Process, April 2002

    • FAD–Public expenditure management expert installation, September 2002

    • FAD–Tax policy, tax administration and customs reform, October-November 2002

    • FAD—Public Expenditure Management Advisor, August 2003-January 2004

    • FAD–Public Expenditure Management, March-April 2004

    • FAD—Support to LTO, April 2005

    • FAD—GST Implementation, April 2005

    • FAD—Support to LTO and GST Implementation, November 2005

    • FAD—Reforming Tax Administration and implementing GST, June 2006

    • FAD—Treasury Function and Related PFM Reforms, July 2007

    • MAE—Foreign reserves management, February-March 2001

    • MAE—Technical Assistance and Training Coordination and Expenditure Resource Mobilization, March 2005

    • MAE—ST Regional Expert Assignment, June-July 2005

    • MAE—ST Regional Expert Assignment, August 2005

    • MAE—Support for the regulatory framework of the Central Bank of Yemen, September-October 2005

    • MFD—Liquidity Management, March-April 2005

    • MFD—Regional Advisor, September 2005

    • MFD—Payment Systems and Monetary Operations, October 2005

    • MFD—Support for the Central Bank of Yemen credit Registry, November- December 2005

    • OTM–TCAP Review, March 2004

    • OTM–Yemen - TCAP, March-April 2004

    • OTM—METAC - Needs Assessment Mission, February 2005

    • STA—Balance of payments statistics, January 2003

    • STA—Government Finance Statistics, January 2004

    • STA—National Accounts Statistics, January 2004

    • STA—National Accounts Statistics, May-June 2004

    • STA—Balance of payments statistics, September 2005

    • LEG—AML/CFT Diagnostic, May 2006

    • LEG—AML/CFT Legal Drafting, November 2006

  2. UNDP/IMF/DFID Program:

    • FAD—LTE on budget management, March 1998-June 2001, and September 2002-January 2004

    • MAE—LTE on bank supervision, May 1997-May 2001

    • MED—LTE on debt management, July 1997-March 2001

    • STA—LTE on balance of payments statistics, February 1998-February 2000

    • FAD—Peripatetic experts on customs reform, July 1999-July 2001

    • STA—Peripatetic expert on national accounts, September 2001-August 2002

    • MAE—Peripatetic expert on foreign reserves management since April 2002

  3. IMF/World Bank Program:

    • MAE—FSAP, October-November 2000

    • FAD—AFMIS Inspection Mission, September-October 2004


When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.


This schedule presents all currently scheduled payments to the IMF, including repayment expectations and repayment obligations. The IMF Executive Board can extend repayment expectations (within predetermined limits) upon request by the debtor country if its external payments position is not strong enough to meet the expectations without undue hardship or risk.


Mission; unless otherwise indicated.