As a result of the Board?s decision, an amount equivalent to SDR 48.75 million (about
"The Yemeni authorities have made commendable efforts to support macroeconomic stability and growth. Nonetheless, political and security challenges have continued to weigh on the policy environment and economic outcomes. In particular, fiscal and external balances have weakened due to delays in key reforms and increased sabotage of oil facilities. Looking ahead, the main challenges are to improve the fiscal and external positions, as well as support inclusive growth and job creation," the IMF Deputy Managing Director, and Acting Chair
"The authorities have launched an ambitious economic program to meet these challenges and durably reduce
"The centerpiece of the authorities' reform package is phasing out large and inefficient fuel subsidies. A first step in this direction has already taken place and will be complemented by well targeted social transfers to the poor. Additional fiscal measures will aim at reducing the budget deficit over the medium term by reforming the civil service and improving tax compliance. These measures will also free budgetary resources for needed infrastructure and social spending.
"To preserve macroeconomic stability in the near term, the central bank needs to adjust monetary policy as needed to limit the impact of subsidies reform on inflation. It should also continue to improve its monetary framework to strengthen policy transmission and support greater exchange rate flexibility. The financial sector reforms planned by the authorities aim at strengthening bank regulation and supervision as well as at enhancing market infrastructure."
As a result, real GDP growth is estimated to have doubled to almost 5 percent. At the same time, average inflation edged up slightly to reach 11 percent (up from about 10 percent a year earlier), and the exchange rate remained stable.
Inflation moderated in the first half of 2014, but oil production declined due to sabotage activities, leading to severe fuel and electricity shortages.
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