Country Brief

Context

With a multitude of challenges confronting the country, the situation in Yemen remains fragile.  The political uncertainty, arising from anti-government protests that started in January 2011, has not abated.  Amidst continued conflict and violence, the uncertainty of Yemen’s political situation and the deterioration of security conditions threaten the stability of a country already confronting a number of difficulties.

The economic situation is worrisome with a rising fiscal deficit. The financial system is facing stress.  Moreover, foreign reserves at the Central Bank and in the financial system are diminishing, and the pressure on the exchange rate continues to build up.  Prices have begun to rise, propelled by the supply uncertainty, energy shortages, and the uncertainties about the Yemeni Riyal exchange rate.

Before the onset of the current crisis, Yemen was already in a precarious situation, dealing with an on-and-off rebellion in its northern province, political tensions between North and South, and the security threats from the Al Qaeda in the Arabian Peninsula.  These challenges add to the medium-term challenge Yemen is facing including widespread poverty (42 percent), very rapid demographic growth (over 3.5 percent a year), lack of clear alternatives to the fast-dwindling oil economy (90 percent of exports and 70 percent of Government revenues), limited institutional capacity and outreach of the State, rapidly-depleting water reserves (with aquifers feeding major cities expected to dry up within the next 15 to 30 years), poor infrastructure, and acute gender issues. 

Strategy

The World Bank group’s program prepared in April 2009 covering the period FY10-FY13 aims to assist the Yemeni people by supporting by four pillars: (1) Accelerating and diversifying economic growth: macroeconomic stability, private sector development, infrastructure and support to non-oil drivers of growth; (2) Enhancing governance: transparency, public finance management and civil service; (3) Fostering human and social development: cross sectoral issues such as gender, youth, qat, education, health, community development and social protection; and (4) Managing natural resource scarcity and natural risks: water resources, natural disasters and climate change.  The Bank hopes for a peaceful resolution to the current situation and looks forward to a continued partnership with the country to address its development challenges.

Operations:

• As of September 2011, WB IDA portfolio consists of 21 active projects for a total net commitment of US$$883 million and $541 million undisbursed balances (including three projects delivered in FY11 for $117 m).  TF portfolio includes 19 projects with total net grant amount/commitments of US$136 million, of which $81 million has been disbursed. 
  
  
• In light of the current political and security environment in Yemen, the World Bank has suspended disbursements under the Yemen portfolio effective July 28, 2011. The decision is consistent with Bank rules which allow such a suspension on the basis of an extraordinary situation that is directly impacting the Bank’s ability to implement its program. The World Bank stands ready to re-engage rapidly and effectively once the situation on the ground stabilizes and is conducive for appropriate operational support and fiduciary oversight.

Results

Notwithstanding the current environment, the World Bank has been involved in a number of sectors which have manifested results from a broad range of projects.  Some selected results include:

• Social Fund for Development:  The World Bank has also provided grant funding and lending assistance towards job creation and income generation; 100,000 loans were provided to support small and medium enterprises.
  
  
• Public Works Project: Through this effort, over 3,900 sub-projects in the following sectors - education, health, roads, agriculture, vocational training, social security, water and sanitation - have been delivered to over 14.7 million poor people.  In addition, more than 74 months of job opportunities have been created including work for 1900 local contractors and 1250 local consultants.
  
  
• Rural Access Project: As a result of the World Banks involvement in this sector, over 400,000 people have gained reliable year-round access to centers of economic activity and public services.

Partners

The World Bank is closely collaborating with a number of Yemen’s development partners including development agencies from France, Germany, Italy, Netherlands, United Kingdom, United States, European Commission, and United Nations agencies.  The World Bank Group is also working closely with the International Monetary Fund on a macroeconomic dialogue. A close dialogue has also been established with the GCC Secretariat and bilateral agencies from the sub-region. 

 

 

All dollar figures are in US dollar equivalents. Updated September, 2011

 

 

For more information, please contact:

In Washington; Lara Saade; Lsaade@worldbank.org; Esther Rosen; erosen@worldbank.org

In Yemen; Samra Shaibani; Sshaibani@worldbank.org