Yemen

Yemen Socio-Economic Update, Issue 15 - June 2016 [EN/AR]

Format
Situation Report
Source
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Originally published
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Facts and Figures

  • The public budget’s financing gap is estimated at $5.8 billion in 2016, apart from the reconstruction needs.

  • The decline in GDP is estimated at 34.6%, and the inflation rate rose by over 30% in 2015.

  • The exchange rate in the parallel market has fluctuated at around YR300/USD in May 2016, compared to YR225/ USD in May 2015.

  • Power supply through the pubic grid has been totally suspended in Sana’a and several other governorates for about 9 months.

  • Fuel imports covered 86%, 15%, and 8% of the local market needs during January, February and March 2016 respectively (OCHA, Shipment Snapshot, April 2016).

  • 14.4 million Yemenis are food insecure (over 50% of the population). (FAO, Situation Report-Yemen, May 9, 2016).

  • 21.2 million Yemenis (82% of the population) are in need of humanitarian assistance, including 9.9 million children, and 2.7million IDPs (31% children) (UNICEF, SitRep, May, 2016).

Highlights:

  • The total public debt has increased significantly in 2015 by 17.3% - from YR4,737 billion (equivalent to $22.1 billion) in 2014 to YR5,564 billion (about $25.9 billion) in 2015.

  • The demand for treasury bills and government bonds, as well as the issuance of Islamic Sukuk, decreased in 2015 compared to 2014. Accordingly, the government debt to the CBY rose to 35% of the total domestic debt. To avoid the inflationary risks of this type of financing, real resources should be mobilized through the resumption of crude oil and gas production and exports, as well as donor support.

  • In 2015, commercial banks were reluctant to increase their treasury bills’ investments due to the decline in real interest rates on treasury bills and banks’ need for liquidity to meet the requests of their clientele.

  • The outstanding external debt stock declined from $7.26 billion in 2014 to $6.88 billion in 2015 due to the suspension of external loans and the repayment of the external debt service.

  • The disbursement of external loans declined from $550.9 million in 2014 to $63.3 million in 2015, by about 88.5%, due to the suspension of donor support and the challenges encountered in the implementation of social and development projects.

  • The public debt as a percentage of Gross Domestic Product (GDP) reached alarming levels of 94.4% in 2015, exceeding the safe limits of 60%. The public debt service (principal and interests) constituted 64.2% of the total public revenues and 34.6% of the total public expenditures in 2015. This means that the public debt burden has exceeded the safe limits (25%). Accordingly, the public debt service has taken more than the social expenditures (education, health, social protection and water).

  • Payments of interests and principal of the external debt amounted to $350.9 million, while the external loan disbursement reached only $63.3 million in 2015. Service payments are expected to reach $406 million in 2016. The scarcity of foreign exchange at present makes it necessary to mobilize external funds to repay the external debt service or to negotiate with the external creditors (especially countries and organizations that have suspended support to Yemen) to postpone the repayment of external debt to the post-war period.