Aden (South24 Center)

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The International Monetary Fund (IMF) reported that Yemen's public debt has surpassed 100% of the gross domestic product (GDP) in areas under the internationally recognized government, while the economy has contracted by 27% since the war erupted in 2014, making it one of the world's most fragile economies.

In a concluding statement issued on Thursday (October 9) after the resumption of Article IV consultations with Yemen following an 11-year hiatus, the IMF detailed how the prolonged war has led to a collapse in economic indicators. Government revenues plummeted from 22.5% of GDP in 2014 to less than 12% in 2024, while public debt surged, the fiscal deficit widened, and arrears to external creditors accumulated.

The statement noted that loss of oil revenues and currency depreciation have eroded citizens' purchasing power and driven poverty rates upward.

It further highlighted that the halt of oil exports since 2022 has turned Yemen into a net energy importer, increasing pressure on the local currency and foreign reserves, which now cover less than one month of imports, despite Saudi Arabia’s financial support of approximately $2 billion between 2023 and 2024.

According to the IMF, Yemen’s economy contracted by 1.5% in 2024, marking the third consecutive year of decline due to falling oil and liquefied natural gas production, exports, and domestic consumption. Inflation reached about 27% last year and surged to over 35% year-on-year by July 2025, following a 30% depreciation of the Yemeni rial since the beginning of the year.

The statement commended government measures to stabilize the exchange rate and the establishment of the National Committee for Regulating and Financing Imports in July, noting that these steps have temporarily improved currency stability and reduced inflation.

This year’s Article IV consultations were held in the Jordanian capital, Amman, between an IMF mission and officials from the internationally recognized Yemeni government, with participation from the Central Bank of Yemen and other government financial institutions.

The discussions focused on macroeconomic conditions, public financial management, monetary and exchange rate policies, and the economic recovery plan launched by the government in early 2025, with technical input from international partners and donor institutions.

The IMF projected a gradual economic recovery for Yemen in the coming years, with growth expected to rise from 0.5% in 2026 to 2.5% by 2030, driven by improvements in non-oil exports, remittances from overseas workers, and the implementation of development projects.

However, it warned that continued internal divisions and political tensions could impede reforms and undermine financial stability, emphasizing the necessity of sustained external support—particularly from Saudi Arabia and the UAE, to maintain economic stability and prevent a further deterioration of the humanitarian situation in the country.