The International Monetary Fund approves an 18-month monitoring program to enhance economic reforms in Yemen.

IMF Approves Non-Financial Monitoring Program for Yemen

The International Monetary Fund (IMF) has approved a non-financial Staff-Monitored Program (SMP) for Yemen, set to last 18 months. This program aims to enhance economic reforms and support the government’s efforts to maintain macroeconomic stability during the current phase.

Objectives of the Program

The program focuses on several key objectives:

• Maintaining macroeconomic stability amid the repercussions of the war in the Middle East.
• Strengthening fiscal discipline and implementing cautious monetary policies while protecting the most vulnerable groups.
• Enhancing institutional capacities and improving data quality.
• Supporting essential services and boosting social protection for those in greatest need.

Strengthening Public Finances 2026–2027

Due to a decline in government spending since the halt of oil exports in 2022, the program will work on:

• Increasing domestic revenues by improving tax compliance and developing customs management.
• Prioritizing essential spending to ensure government operations and support economic activity.
• Alleviating the acute humanitarian crisis.
• Improving public resource management, consolidating government accounts, and enhancing transparency.

Core Pillars of the Program

The program aims to enhance the stability of the financial sector and financial intermediation. It will implement a risk-based approach to combat money laundering and the financing of terrorism. Additionally, it seeks to protect social spending and establish a more efficient and targeted social protection system.

IMF’s Economic Outlook for Yemen

The IMF stated that economic activity may stabilize by 2027, supported by:

• Decreased global prices.
• Normalization of monetary conditions.
• Continued external financing.
• Strong implementation of economic policies that build confidence.

Monetary Policy and Exchange Rate

The program’s monetary policies are designed to maintain price stability through:

• Clear limits on central bank financing of the budget deficit.
• Adoption of a flexible exchange rate based on market mechanisms to absorb shocks and protect foreign reserves.

Impact of the Program on Yemen’s Economic Future

The IMF confirmed that ongoing implementation of the program will enhance:

• The credibility of economic policies.
• Yemen’s financial and external positions.
• Conditions for a comprehensive restructuring of public debt.
• Achieving stronger, more sustainable, and inclusive economic growth in the coming years.

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