SANA’A, Feb. 20 (Saba)- The Central Bank of Yemen has said that the country's total external obligations increased 2.3 per cent to just over $ 6.29 billion at the end of 2009, compared with $ 5.89 billion at the end of 2008.
Yemen's external debt, and increasingly its domestic debt, has been rising steadily over the last several years. This trend will likely continue into the foreseeable future as the government looks to the international community to help fund its shift away from declining oil resources to non-hydrocarbon economic endeavors.
In its annual report, the CBY said that these debts were owned by international financial funds, including the Arab Development Fund, International Fund for Agricultural Development (IFAD), the International Monetary Fund (IMF), OPCE’s Development Fund, the Islamic Development Bank (IDB) and the European Union.
‘’Yemen’s debts for members of the Paris Club amounted to $ 1.7 billion, of $ 1.2 billion for Russia, $ 270 million for Japan and the rest for The United States, France, Italy, Spain, Denmark, the Netherlands and Germany’’, said the CBY.
In contrast, debt owed to non-Paris Club countries rose 8.3 per cent y/y to $ 933.5 million on the back of a 51.1 per cent y/y surge in debt owed to China. At the end of 2009, Yemen owed China $ 272.6 million, which reflects in part a September 2009 announcement that China will provide Yemen with $ 70 million in soft loans to jumpstart its domestic textile industry. Debt owed to Saudi Arabia was also up 1.2 per cent y/y to $ 372.4 million.
At the end of 2009, over half 52 per cent of Yemen's official external debt was owed to multilateral institutions like the World Bank and IMF. Money owed to these institutions grew 2.3 per cent year-on-year in December to US$3.2 billion.
Just under $ 2.2 billion of this amount was owed to the World Bank's International Development Association, loans which are almost entirely interest free. While debt owed to the IMF declined 45.4 per cent y/y to $ 52.3 million, external obligations owed to the Arab Fund for Social and Economic Development increased 3.6 per cent y/y to $ 669 million as did outstanding loans from the Islamic Development Bank up 15.5 per cent y/y to $ 93.2 million.
The United States and other developed nations have already pledged an increase in development assistance to Yemen via a combination of loans and aid, which will be crucial for the country to develop its inadequate infrastructure and increase non-hydrocarbon economic activity.