Press releases

• Pages: 108-109

Page 108

Republic of Yemen: ESAF and EFF

The IMF has approved loans and credits totaling SDR 47 million (about $64 million) to support the Republic of Yemen's second annual programs under the Enhanced Structural Adjustment Facility (ESAF) and Extended Fund Facility (EFF). Of the total, SDR 36 million (about $49 million) is available under the ESAF, and SDR 11 million (about $15 million) is provided under the EFF.

The latest disbursements are from a three-year loan and credit package totaling the equivalent of SDR 370.7 million (about $506 million) that was approved for Yemen on October 29, 1997 (see Press Release No. 97/49, IMF Survey, November 17, 1997, page 363). Of that total, SDR 264.8 million (about $362 million) represents commitments under the ESAF, and SDR 105.9 million (about $145 million), under the EFF. Two ESAF disbursements totaling SDR 88 million Directors indicated that the transition period for observance of the new standards should be through March 31,2000. (about $120 million) have been made, and two EFF loans, amounting to SDR 18 million (about $25 million), have also been disbursed. Medium-term strategy and 1999 program

The fall in oil prices reinforced Yemen's commitment to the medium-term strategy pursued since 1995, with its emphasis on financial discipline and market-oriented reforms to encourage private non-oil-sector growth while protecting health and education expenditure and social safety net outlays. In line with this medium-term strategy, the weight of adjustment will be on fiscal policy in 1999. With some improvement in private savings expected from ongoing financial sector reform, a reduction in the external current account deficit by about 2.5 percent of GDP is targeted. Monetary policy will aim at an inflation rate of about 9 percent, including the effects of increases in wheat and flour prices. Structural reforms

Yemen has already begun the next phase of a broad structural reform program, with key steps taken early in 1999 and many additional measures aimed at further developing the market-oriented regulatory and legal frameworks needed to attract domestic and external investment, and to stimulate economic growth, on the agenda for the remainder of the year. Structural reforms already taken, or expected, in 1999 include deepening civil service reforms central to the implementation of the remainder of the program; additional income tax and sales...