São Paulo — The rise in global commodity prices is exacerbating the economic crisis in Yemen, an Arab country in the Middle East that faces a civil war. An International Monetary Fund (IMF) team conducted a virtual mission from Jordan with Yemeni authorities from May 31 to Tuesday (7), and described the outlook.
The mission leader Brett Rayner said the economic and humanitarian crisis in the country is growing. “With the population already suffering from 7 years of conflict, the effects of the war in Ukraine have only exacerbated the crisis,” Rayner was quoted as saying in a statement. According to the World Food Program, the number of food insecure people in Yemen is projected to reach 19 million, two-thirds of the population
In the financial sphere, the recent exchange rate depreciation have pushed inflation to nearly 60%. Yemen is a net importer of fuel, so higher oil prices have added to balance of payments pressures and financing needs.
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But the IMF stresses that recent progress towards peace and the continuing truce have improved prospects for economic stability. An external financing package announced by the Gulf Cooperation Council in April, higher remittances and recent progress in unlocking frozen reserves of the Central Bank of Yemen have led to an appreciation of the local currency and taken some pressure off domestic prices.
With reduced fighting, modest economic growth of around 2% is expected to return in 2022, albeit with considerable uncertainty regarding the evolution of the conflict. Rayner says that recent policy reforms are helping to reinforce exchange rate and economic stability. The IMF advised the authorities to accelerate public financial management reforms to promote good governance and efficient use of scarce resources.
Translated by Guilherme Miranda
