"The plan focuses mainly on revenues, and largely ignores the issue of expenditure and ways to rationalize it, in addition to the absence of clear implementation mechanisms…"

Abdullah Al-Shadli (South24 Center)

At the end of October 2025, amid a severe financial crisis and sharp economic deterioration plaguing Yemen, the Presidential Leadership Council (PLC) issued Resolution No. 11, approving a comprehensive Economic Reform Priorities Plan. The decision came after months of government failure to pay public sector salaries, with the exception of one salary disbursed in October — reportedly covered through borrowing — a clear indication of the depth of the financial crisis gripping the country.

The plan seeks to restructure public resources and unify the financial system that has remained divided since the outbreak of war, by mandating all governorates to deposit their revenues into the government’s general account at the Central Bank of Yemen in Aden, and prohibiting any collection or spending outside official channels. It also includes measures to unify the customs and tax administration, abolish illegal funds and levies, and control newly established maritime outlets.

The plan further addresses sensitive issues such as liberalizing the customs dollar exchange rate, unifying fuel prices, and adopting an urgent plan to boost sustainable revenues. These measures aim to correct collection imbalances, achieve fiscal discipline, and ensure the payment of salaries and essential expenditures at a time when the state faces a growing structural deficit.

Despite its technical nature, the plan represents a political and administrative gamble on the government’s ability to enforce genuine financial centralization and restore confidence in institutions weakened by division and competing power centers. While some view it as a long-awaited opportunity for reform, others doubt its feasibility amid the absence of political will, effective oversight, and a deteriorating economic environment.

What is the feasibility of this plan, what challenges does it face, and what are the recommendations that experts and specialists suggest regarding it?

Effectiveness of the Plan

The Economic Reform Plan announced by the PLC is an attempt to restructure the state’s finances and achieve a minimum level of economic stability. However, it faces major challenges on the ground.

In this context, Mustafa Nasr, head of the Center for Economic Media Studies, said: “The plan focuses mainly on revenues, but largely ignores the issue of expenditure and ways to rationalize it, in addition to the absence of clear implementation mechanisms and a specific timeline announced by the government.”

Nasr told South24 that “Economically and politically, the plan seems directed at addressing the government’s own revenue problem, as current resources cover only about 25% of public expenditures, including salaries.” He explained that financial stability requires a comprehensive approach that includes expenditure rationalization, identifying additional resources, and sustaining reforms across all levels.

Dr. Mohammed Jamal Al-Shaibi, Professor of Public Finance at the University of Aden, noted that measures such as channeling revenues to the Central Bank and liberalizing the customs dollar rate represent a “turning point,” but will remain mere ink on paper unless accompanied by serious executive steps and genuine financial authority exercised on the ground.

Al-Shaibi told South24 that the success of the plan depends on the commitment of local authorities to remit revenues regularly, and the government’s ability to enforce its decisions in governorates that still experience uneven control and financial authority.

Dr. Sami Mohammed Qasim, Associate Professor at the Faculty of Economics, University of Aden, told South24: “This plan is, in principle, realistic and represents a long-awaited matrix of measures”, and noted that it includes reforms long demanded by economic and financial circles.

Qasim added that the plan’s details “reflect a practical orientation toward resource control and financial transparency,” but its success “will depend on the government’s ability to translate these provisions into tangible reality, especially amid the current institutional and political fragmentation that hinders unification of financial and administrative decision-making.”

Economist Dr. Issa Abu Haleqa sees the step as necessary for economic recovery, but warns of challenges posed by political division, weak institutional capacity, and pervasive corruption.

Abu Haleqa told South24 that the plan’s main objectives — mobilizing revenues, controlling maritime outlets, and unifying the customs exchange rate — are logical and feasible, but require effective coordination between the Central Bank, Ministry of Finance, and provincial governors to ensure they do not end up becoming mere formalities.

Liberalization of the Customs Dollar Rate

The decision to liberalize the customs dollar exchange rate is among the most controversial and sensitive provisions of the reform plan. Resolution No. 11 of 2025 stipulates complete liberalization, aligning the customs dollar rate with the current market rate, of about 1,617 Yemeni rials per US dollar.

Through this measure, the government aims to increase customs revenues and narrow the gap between the official and market rates, thereby strengthening the Central Bank’s reserves and achieving relative currency stability. However, the decision has sparked broad economic concerns, given the fragility of the financial system and weak enforcement capacity in governorates.

Experts told South24 that implementing customs dollar liberalization before completing consolidation of revenue control and unifying financial outlets could lead to a sharp increase in the prices of basic commodities and imports, as traders would be forced to pay customs duties at a higher exchange rate, with the cost being passed on to the consumers.

Past experiences since 2017 show that successive governments failed to stabilize the customs dollar rate effectively, gradually raising it from 250 rials per dollar to about 750 rials, without parallel reforms in oversight, transparency, or customs infrastructure.

Mustafa Nasr said raising the customs dollar rate is “relatively easier compared to other reforms, such as rationalizing expenditure or halting illegal levies,” but warned that implementing it without comprehensive control of maritime outlets and smuggling could lead to greater market distortions.

He added that law-abiding traders would otherwise end up bearing the additional costs, while smugglers would gain wider opportunities due to lower prices, exacerbating the economic inequities.

Dr. Issa Abu Haleqa stressed the need for implementing the liberalization of the customs dollar rate within a clear timeframe, and be accompanied by financial and reserve measures to prevent price hikes and mitigate hardship for vulnerable groups.

Dr. Sami Qasim expressed relative optimism, considering the decision “carefully calculated and targeting non-essential goods.” He said: “Basic commodities remain exempt from customs duties, so the impact on overall prices will be limited as long as regulatory compliance is maintained.”

Challenges Facing the Plan

The economic reform plan faces a wide range of structural and administrative challenges that threaten its success. Chief among these is resistance from actors who have captured public resources in previous periods, whether in governorates or through illegal funds, and who are now reluctant to relinquish the gains acquired due to lack of oversight and poor fiscal control.

The resolution also mandates the Ministries of Defense and Interior to abolish all checkpoints that impose illegal levies, which constitutes a true test of the government’s ability to enforce such measures.

In this regard, Mustafa Nasr warned that failure to implement the reforms in a comprehensive manner could increase smuggling rather than reduce it, undermining the formal market’s ability to withstand unfair competition. He added that controlling maritime, land, and air outlets and closing sub-accounts of government entities represents a major challenge, especially amid weak institutional oversight and entrenched corruption.

Dr. Mohammed Jamal Al-Shaibi argued that the key challenge lies in the commitment of local authorities and cooperation of the private sector, noting that any failure to remit revenues or continuation of military and arbitrary levies would render the plan devoid of substance and intensify inflationary pressures.

Dr. Issa Abu Haleqa emphasized that the absence of political and institutional stability is the greatest obstacle to any economic reform, adding that weak coordination among ministries and financial agencies complicates efforts to control revenues and enforce accountability.

Dr. Sami Qasim pointed out that the lack of clear mechanisms for accountability and oversight, such as identifying the responsible entities or imposing sanctions — could reduce any reform plan to mere slogans and erode public trust in the government’s ability to deliver.

Recommendations

In their recommendations regarding the PLC’s decision, experts speaking to South24 stressed that the success of the Economic Reform Plan requires strong political will, clarity in executive responsibilities, and a defined timeline to ensure full compliance by all government entities.

Dr. Sami Qasim called for detailing the required matrix of measures and identifying the agencies responsible for implementation, monitoring, and oversight, with clear deadlines for each step. He emphasized the importance of “adopting a strict system of penalties, including dismissal and referral to the public prosecutor for any entity that neglects or obstructs implementation,” noting that “institutional discipline and serious accountability are the foundation of any sustainable economic success.”

Mustafa Nasr explained that the government needs to implement all provisions of the plan simultaneously, with a focus on rationalizing expenditure and seeking alternative, sustainable revenue sources. He pointed to potential alternatives such as telecommunications, electricity, and regulating fuel taxation, alongside creating a safe environment for the private sector to boost domestic and foreign investment.

Dr. Mohammed Jamal Al-Shaibi said the next phase requires effective coordination between the government, Central Bank, local authorities, and the private sector, in addition to engaging the international community to support the reforms.

Dr. Issa Abu Haleqa recommended establishing a central implementation committee comprising the Ministry of Finance, Planning, Customs, the Central Bank, and governors, to ensure comprehensive follow-up. He also called for publication of regular reports on revenues and expenditures, and linking any adjustments in fuel prices or the customs dollar rate to social protection measures for the most vulnerable groups.

These recommendations converge on a unified vision: that the success of the Economic Plan cannot be achieved through texts or isolated decisions, but through integrated implementation, accountability, and transparency. As experts see it, the plan represents a genuine opportunity to rebuild Yemen’s financial system, but remains contingent on the government’s ability to transform it from a theoretical project into tangible reality that restores trust between the state and society.