IMF sets $553 mn loan for Yemen

National Yemen

The International Monetary Fund on Tuesday approved a $553 million loan for Yemen to help the struggling country stabilize its finances and boost growth.

The three-year loan aims to support the Yemen government in implementing a package of reforms amid a challenging political and security environment, with the government facing attacks by an Al-Qaeda affiliate and a rebellion by minority Shiites.

The reforms are also focused on the politically difficult plan to eliminate large fuel subsidies in order to reduce a drain on the state budget.

“A first step in this direction has already taken place and will be complemented by well targeted social transfers to the poor,” the IMF said.

“Additional fiscal measures will aim at reducing the budget deficit over the medium term by reforming the civil service and improving tax compliance.”

The announcement of the new program, with a first disbursement of about $74 million, came as Yemen’s president Abdrabuh Mansur Hadi agreed to the demands of the Shiite Huthi rebels to cut back a fuel hike set in July by 30 percent, and to shake up the current unity government.

Faced with increased pressure from the Huthis and a deepening political crisis, “the president has agreed to go ahead with the initiative and form a new national unity government,” Hadi’s media advisor Fares Saqqaf told AFP.