The International Monetary Fund (IMF) has concluded its Article IV mission to Yemen, marking the first such consultation in 11 years. The IMF staff’s preliminary findings highlight Yemen’s ongoing humanitarian crisis and economic challenges following years of civil conflict.
According to the statement, “The IMF welcomes the opportunity to resume Article IV consultations with Yemen after an 11-year hiatus. The conflict that began in 2014 halted a three-year Extended Credit Facility (ECF) arrangement, suspended the production of key economic indicators, and disrupted policymaking.”
Yemen remains one of the world’s most fragile states due to prolonged conflict. Over the past decade, real GDP declined by about 27 percent, per capita income fell sharply, and currency depreciation combined with inflation reduced real incomes. Attacks on oil facilities in 2022 forced Yemen to become an oil importer. Humanitarian needs remain severe, with more than half of the population requiring urgent assistance.
Government finances have deteriorated significantly over the last ten years. Revenues dropped from 22.5 percent of GDP in 2014 to below 12 percent in 2024, while public debt rose above 100 percent of GDP recognized by international authorities. The current account deficit also widened considerably during this period despite financial support from Saudi Arabia totaling approximately $2 billion between 2023 and 2024.
In 2024, Yemen’s economy contracted for a third consecutive year as oil and LPG production fell along with exports and domestic consumption. Inflation reached 27 percent in 2024 and surpassed 35 percent year-on-year by July 2025 due to a weakening Yemeni rial—down by around 30 percent since early in the year—which led authorities to adopt foreign exchange stabilization measures in August.
The IMF statement notes: “Staff project a moderate GDP contraction of 0.5 percent in 2025, mainly due to reduced government spending and electricity services amidst limited available financing.” Inflation is expected to ease later this year as recent policy measures stabilize the currency.
Looking ahead, modest economic recovery is projected over the medium term if reforms continue and external conditions improve. Growth could gradually rise from around half a percent in 2026 up to about two-and-a-half percent by 2030 as non-oil exports increase alongside remittances and refined oil product output for domestic use.
However, risks remain high both domestically—from renewed conflict or social unrest—and externally—from rising global commodity prices or reduced grant support that could further strain budgets and worsen humanitarian conditions.
“To tackle immediate vulnerabilities and structural challenges,” says the statement, “the IRG launched an Economic Recovery Plan (ERP) earlier this year. The mission welcomes the ERP emphasis on enhancing public finance sustainability, controlling inflation, and strengthening governance and institutions.”
The IMF recommends further efforts toward fiscal sustainability through revenue mobilization and expenditure controls across government sectors while maintaining focus on inflation control via market-driven exchange rates. Broader structural reforms are needed for long-term growth—including better governance practices; stricter anti-money laundering policies; improved tax transparency; reducing business barriers; expanding renewable energy; upgrading electricity transmission infrastructure; and supporting private sector development.
The mission concludes: “These reforms, contingent on political stabilization and external support, are vital for economic recovery and social cohesion, ultimately improving the well-being of all Yemenis.”
The final report will be prepared based on these findings for presentation to the IMF Executive Board once approved by management.