Yemen is seeking a low-interest loan of up to $450 million from the International Monetary Fund to support economic reforms, according to Yemeni central bank governor Mohammed bin Hammam.
Yemen
is
seeking a low-interest loan of up to $450 million from the International
Monetary Fund to support economic reforms, according to Yemeni central bank
governor Mohammed bin Hammam.
The loan, which would take the form of an extended credit facility, would be
equivalent to 100% of
Yemen
's
$150 million quota with the IMF annually over a three-year period, Mr. Bin
Hammam said in an interview Monday. That's the maximum that IMF member
countries can borrow in relation to their quotas, he added.
"We are a poor country, and extended facility loans are given to poor
countries at lower interest rates and maybe even without interest," Mr.
bin Hammam said. He didn't specify the nature of the economic reform plan
Yemen
is
planning, noting that the talks with the IMF are at an early stage.
His remarks represent the first time
Yemen
has
confirmed talks with the IMF on additional loans and the amount of assistance
under discussion.
The Arab country faces severe economic challenges following the popular
uprising in 2011 that resulted in the toppling of former President Ali Abdullah
Saleh, who had held power for more than 30 years. The new government, formed in
February 2012, is due to hold parliamentary and presidential elections early
next year, after a two-year transition.
Last year,
Yemen
received an emergency $94 million interest-free loan from the IMF, intended to
stabilize the economy, safeguard foreign exchange reserves, create jobs and
reduce poverty. At the time, the IMF described the emergency loan as an interim
measure, to give the government breathing space to formulate longer-term
economic measures.
The IMF has said that Yemen faces numerous economic challenges, including the
need to improve tax collection, reform the civil service, and reduce subsidized
fuel prices, the cost of which accounts for about 8% of gross domestic product.
In a report on the Yemeni economy in December, the IMF said it "stands
ready to continue to provide technical assistance and policy advice in support
of
Yemen
's
home-grown reform efforts and to consider any further financial assistance the
authorities may request."
Under its extended credit facility programs, the IMF offers cheap loans to
low-income countries, repayable over 10 years. In exchange, IMF member
countries agree a "letter of intent" that sets out a series of
economic reforms.
A donors' conference in
Saudi Arabia
last year
estimated that
Yemen
needs
close to $11 billion to support its economic recovery. That conference yielded
$6.4 billion in aid pledges for
Yemen
, and
a subsequent meeting in
New York
produced an additional $1.4 billion in support. But most of that aid will come
in the form of financing for projects, rather than support for the government's
budget, according to Mr. Bin Hammam.
He said that
Yemen
has
about $6 billion in foreign exchange reserves, sufficient to cover more than
three months of imports.
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