Business

Donors Assistance to Yemen Slowed Down

National Yemen feat

The Executive Bureau (EB)and the World Bank (WB) have jointly released the 2014 annual status report on Yemen’s donor pledges. While the level of disbursement  and the donors commitments to pledge  their allocated amount  remains a challenge for the EB.

The allocated aids remain high, donor community has tended to spend substantially less than their allocated funds. This is a problem of aid predictability that continues to be a prevalent theme since the announcement of the pledges in 2012. The overall disbursement level is currently standing at 38.7% of all donors’ funds with only 4% increase since January 2014. The trend of disbursement is quite different when analyzed for each donor.

The report has revealed that the funds allocated to security and stability had the highest disbursement level. Around 96.9% (169 million US$) of the total funds allocated towards security and stability (174.35 million US$) have already been disbursed. Macroeconomic stability comes second with a disbursement rate of 88.7% (1,341 million US$) of the total funds allocated towards the priority. This amount includes the one billion US$ deposit to the Central Bank provided by Saudi Arabia in 2012. The humanitarian and reconstruction projects come in third place with a 60.2% (455.17 million US$) disbursement level.

The year 2014 witnessed a notable increase of donor aid to Yemen. An additional 2,523 million US$ were pledged to the country. The main contributors to this increase in additional funding were Saudi Arabia with 1,253 million US$ (48.9% of 2014 additional funds), the IMF with 552.9 million US$ (21.9% of 2014 additional funds), and the USA with around 293.7 million US$ (11.6% of 2014 additional funds). Saudi Arabia has already disbursed all of its additional pledge, which is a 100% grant, to help Yemen meet the country’s budget emergency needs. The IMF 552.9 million US$ is a concessionary loan that will be paid to the GoY within a 3-year program. The first installment (73.8 million US$) has already been disbursed in August 2014 ,GCC countries have pledged 4,415 million US$ in the Riyadh and New York donor conferences which formed about 57.4% of all donors’ funds raised for Yemen in 2012. In 2014, the GCC donors’ pledge allocation has increased by 5.0% (221 million US$) to reach 93.2%, while their approved funds increased by 6.1% (270 million US$) to reach 49.3%. The disbursement increase for the GCC donor pledges during 2014 was even lower with only 2.0% increase (90 million US$). Currently the total GCC donors disbursement of their original pledges remains at 28.1% (1245 million US$) which includes the one billion US$ deposit at the Central Bank of Yemen.

On aid absorption level , the overview of the pledges in 2014 reveals that the allocation and approval of the original pledges (7,698 million US$) announced in Riyadh and New York conferences in December 2012 are continuing to increase but at a slow pace. The latest figures of the allocated funds stand at around 7,362 million US$, reflecting a 4.7% increase from January 2014 level, while the overall approved funds during 2014 increased by 10.3% from earlier in the year. While aid allocations remain high, the donor community has tended to spend substantially less than their allocated funds. This is a problem of aid predictability that continues to be a prevalent theme since the announcement of the pledges in 2012. The overall disbursement level is currently standing at 38.7% of all donors’ funds with only 4% (around 301 million US$) increase since January 2014. The main contributors to this increase are the UK (85.27 million US$), Qatar (51 million US$), Germany (30.60 million US$), and the Netherlands (29.72 million US$). Some other donors like the USA, Japan and Sweden have already reached a 100% disbursement rate of their original pledges as of January 2014. In 2014, the GCC donors’ pledge allocation has increased by 5% (221 million US$) to reach 93.2%, while their approved funds increased by 6.1% (270 million US$) to reach 49.3%. The GCC donors pace for disbursing their original pledges remain very modest. The GCC donors’ disbursement rate increased by only 1.9% (85.81 million US$) during 2014. Given that the majority of GCC donor-funded projects are large scale infrastructure projects that have a significant socioeconomic impact on the country, the GoY needs to quickly develop and adopt a fast track mechanism for the acceleration of approval and implementation of such large projects.

During 2014, the GCC donors, however, have significantly increased their pledges to Yemen, thanks to Saudi Arabia’s generous emergency financial support of 1,235 million US$. This generous fund was granted to Yemen during President Hadi’s visit to Saudi Arabia in July 2014 to support the Yemeni Government with its fiscal budget urgent needs. International and Regional Finance Institutions (IRF) ranked second among the three donors’ clusters in terms of pledging. 23.47% (1,807 million US$) of the total donors’ pledges to Yemen in 2012 were contributed by IRF donors. IRF donors’ pledges allocation has reached 100% in August 2014 making it the only cluster to fully allocate its original pledges. The approved funds of the IRF pledges have also progressed reasonably rapidly in 2014 with 18.4% (331.7 million US$) of the total original pledges approved during the year. IRF funds’ approval level has been setting at 99.4% since last quarter. The disbursement level of the cluster, however, did not keep up with the rate of allocation and approval of funds. Only 1.2% (22.45 million US$) disbursement increase was realized in 2014.

Finally, the OECD countries have pledged 1,476.5 million US$ in the Riyadh and New York donor conferences, which forms around 19% of all donors’ funds raised for Yemen in 2012. The allocation, approval and disbursement levels of the OECD original pledges are progressing relatively well. In 2014, the OECD allocated funds increased by 5.7% (84.6 million US$) reaching 97.6% of their original pledges. The rates of approval and disbursement for the OECD countries in 2014 were much faster than the rate of allocation with 12.7% (187.87 million US$) of funds approved and 13% (192.15 million US$) disbursed during the year.

In addition to tracking donor pledges, the EB has been working for the past three months on activating and developing the Yemen Aid Management Information System (YAMIS) in close cooperation with MoPIC and UNDP. YAMIS aims to serve as a reliable and credible tool for tracking donors’ assistance to Yemen at both the pledge and project levels. In late November 2014, the UNDP financed a mission for the YAMIS team to meet with Synergy development team to address the technical issues that have been identified in the system.