Local News

IMF authorizes $560m loan to Yemen

National Yemen

Rains in Sana’a block streets

Yemen reached an agreement with the International Monetary Fund (IMF) for a $560 million loan, the finance minister said on Friday, after the government ordered cuts on fuel subsidies public spending.

Planning and Finance Minister Mohammed al-Saadi said the funds would be paid over three years and the government expected the first payment within two months.

Yemeni officials hope the IMF deal will help unlock more funds from donor countries, which have so far been reluctant to contribute due to fears of corruption and a lack of progress in economic reforms.

“There is an improvement in our revenues and the IMF will support the government’s position before donor countries,” Saadi said.

Donors have so far pledged some $8 billion to Yemen, but little of the money has come through.

The pan-Arab al-Hayat newspaper reported on Friday that the agreement, which it said had been agreed in talks held in Jordan in May, was provisional and awaiting endorsement by the IMF’s board.

The IMF has pressed Yemen to cut energy subsidies that cost the state $3.07 billion last year, equivalent to 30 percent of revenues and 21 percent of expenditure.

But reducing subsidies is fraught with risk in a country in which a third of the population of 25 million lives on less than $2 a day, and an austerity package announced last month did not address subsidies.

In July, President Abd-Rabbu Mansour Hadi ordered a clampdown on public sector spending, restricting foreign travel for ministers and ordering a feasibility review of state-owned companies.

Yemen’s previous finance minister told Reuters in May the country was seeking “substantially more” than $560 million from the IMF, and that the Fund’s board was expected to finalize a deal in July.