IMF approves $370 mln for Yemen as currency falls
WASHINGTON | Tue Aug 3, 2010 12:50am BST
WASHINGTON Aug 2 (Reuters) - The International Monetary Fund approved on Monday a $370 million loan for Yemen to help the Arab state stave off a growing economic crisis that has seen its currency tumble recently to record lows.
The IMF said it would immediately disburse an initial sum of $53 million to the government and the remainder would be subject to quarterly reviews.
Yemen's economy has worsened as the government struggles to cement a fragile truce against rebels in the north and curb an increasingly violent separatist movement in the south, while also fighting an al Qaeda wing based in the country.
The country's currency, the rial, has fallen against the U.S. dollar, despite a $57 million injection into the exchange market by the central bank. [nLDE6700C0]
The central bank has blamed the rial's recent drop on a worsening security situation and increased demand for foreign currencies to import goods for the Muslim fasting month of Ramadan, which start in August.
In the first year of the loan program, the IMF said the adjustment would focus on fiscal measures and raising revenues through tax policy changes.
The IMF said revamping tax policies would include fully implementing a general sales tax and a package of laws that abolishes most exemptions on tax and customs duties.
The IMF said the economic program targets growth of 5 percent annually, while inflation should stay in the vicinity of 10 percent a year.
Meanwhile, the fiscal deficit should decline to 3.5 percent of GDP in 2013 from 5.5 percent this year, the IMF said. (Reporting by Lesley Wroughton; editing by Andre Grenon)
WASHINGTON | Tue Aug 3, 2010 12:50am BST
WASHINGTON Aug 2 (Reuters) - The International Monetary Fund approved on Monday a $370 million loan for Yemen to help the Arab state stave off a growing economic crisis that has seen its currency tumble recently to record lows.
The IMF said it would immediately disburse an initial sum of $53 million to the government and the remainder would be subject to quarterly reviews.
Yemen's economy has worsened as the government struggles to cement a fragile truce against rebels in the north and curb an increasingly violent separatist movement in the south, while also fighting an al Qaeda wing based in the country.
The country's currency, the rial, has fallen against the U.S. dollar, despite a $57 million injection into the exchange market by the central bank. [nLDE6700C0]
The central bank has blamed the rial's recent drop on a worsening security situation and increased demand for foreign currencies to import goods for the Muslim fasting month of Ramadan, which start in August.
In the first year of the loan program, the IMF said the adjustment would focus on fiscal measures and raising revenues through tax policy changes.
The IMF said revamping tax policies would include fully implementing a general sales tax and a package of laws that abolishes most exemptions on tax and customs duties.
The IMF said the economic program targets growth of 5 percent annually, while inflation should stay in the vicinity of 10 percent a year.
Meanwhile, the fiscal deficit should decline to 3.5 percent of GDP in 2013 from 5.5 percent this year, the IMF said. (Reporting by Lesley Wroughton; editing by Andre Grenon)