April 5, 2012 / 1:41 AM / 6 years ago

IMF approves $93.7 mln for Yemen's crisis-hit economy

WASHINGTON (Reuters) - The International Monetary Fund resumed lending to Yemen on Wednesday, approving the payment of a $93.7 million loan to the country to address its urgent balance of payments deficit, which has been worsened by a year of political turmoil.

A child collects empty bottles of water to sell in Sanaa February 20, 2012. REUTERS/Ahmed Jadallah/Files

IMF Deputy Managing Director Nemat Shafik said the fund would immediately disburse the full amount.

“A year-long political crisis and civil unrest have taken a serious toll on the Yemeni economy, endangering the humanitarian situation,” Shafik said in a statement.

Sparked by street protests in other countries in the Middle East and North Africa, Yemen was brought to the brink of a civil war that ended the 33-year-rule of President Ali Abdullah Saleh. Yemen, with widespread poverty, is the poorest country in the Arab world.

The IMF approved a $370 million loan for Yemen in 2010, but just a fraction of the money was disbursed before its economic program went off track.

Shafik said the loan would help Yemen deal with pressing financing needs, giving the government time to compile a medium-term economic plan.

She also said donor support was critical.

“Financing needs are likely to remain large as the political crisis has worsened poverty and unemployment conditions and severely impacted tax revenues,” Shafik said.

Reporting by Lesley Wroughton, Editing by Gary Crosse

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