Yemen

Economy

Main article: Economy of Yemen

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At unification, both the YAR and the PDRY were struggling, underdeveloped economies. In the north, disruptions of civil war (1962-70) and frequent periods of drought had dealt severe blows to a previously prosperous agricultural sector. Coffee production, formerly the north's main export and principal form of foreign exchange, declined as the cultivation of qat increased. Low domestic industrial output and a lack of raw materials made the YAR dependent on a wide variety of imports.

Related Topics:
Drought - Coffee - Qat

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Remittances from Yemenis working abroad and foreign aid paid for perennial trade deficits. Substantial Yemeni communities exist in many countries of the world, including Yemen's immediate neighbors on the Arabian Peninsula, Indonesia, India, East Africa, and also the United Kingdom, and the United States. Beginning in the mid-1950s, the Soviet Union and China provided large-scale assistance.

Related Topics:
Foreign aid - Indonesia - India - East Africa - United Kingdom - United States - 1950 - Soviet Union - China

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In the south, pre-independence economic activity was overwhelmingly concentrated in the port city of Aden. The seaborne transit trade, which the port relied upon, collapsed with the closure of the Suez Canal and Britain's withdrawal from Aden in 1967.

Related Topics:
Suez Canal - 1967

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Since unification, the government has worked to integrate two relatively disparate economic systems. However, severe shocks, including the return in 1990 of approximately 850,000 Yemenis from the Gulf states, a subsequent major reduction of aid flows, and internal political disputes culminating in the 1994 civil war hampered economic growth.

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Since the conclusion of the war, the government entered into agreement with the International Monetary Fund (IMF) to institute an extremely successful structural adjustment program. Phase one of the IMF program included major financial and monetary reforms, including floating the currency, reducing the budget deficit, and cutting subsidies. Phase two will address structural issues such as civil service reform. The World Bank also is active in Yemen, with 22 active projects in 2004, including projects to improve governance in the public sector, water, and education. Since 1998, the government of Yemen has sought to implement World Bank economic and fiscal recommendations. In subsequent years, Yemen has lowered its debt burden through Paris Club agreements and restructuring U.S. foreign debt. In 2003, government reserves reached $5 billion.

Related Topics:
International Monetary Fund - World Bank - 2003

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Marib oil contains associated natural gas. Proven reserves of 10 to 13 trillion cubic feet (283 to 368 km³) could sustain a liquid natural gas (LNG) export project.

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