Yemen, Republic of, was formed in May 1990 from the merger of the previous Yemen Arab Republic in the north and People’s Democratic Republic of Yemen in the south. In the first few years policy lacked coherence and discipline, but from 1995 it became more consistent, until the civil war erupted in late 2014.
| Years | Targets and attainment | Classification |
| 1990-94 | following acceptance late 1989 of draft unity constitution, May 1990 unification of Yemen Arab Republic and People’s Democratic Republic of Yemen in Republic of Yemen, with economic policies mostly continuing those of the larger and more open YAR; currency is continuation of Yemeni rial of YAR, dinar of PDR Yemen depreciated then withdrawn, new coins issued 1993; multiple official rates pegged to USD with forex market heavily regulated, but most transactions through parallel market, tolerated then legalised 1992, operated by money-changers; monetary policy largely passive, monetary growth dominated by fiscal deficits, real interest rates negative; civil war 1994 also contributes to high inflation, rising velocity, soaring parallel forex premium; oil production and exports grow rapidly; statistical database poor | unstructured discretion UD |
| 1995-2014 | exchange rates devalued, largely unified and floated 1995-96, money-changing liberalised, with fiscal and monetary stabilisation from mid-1995; full official and parallel exchange rate unification 1996, with float over time becoming more managed in favour of a (varying rate) crawl vs USD; some interest rates and reserve requirements reform, Treasury bill auctions introduced, but no interbank market emerges and monetary policy instruments long remain limited and mostly direct, while monetary financing of fiscal deficits is significant; central bank certificates of deposit issued from 2001; oil revenues declining from early 2000s, only partly offset by gas revenues from 2010 (with oil facilities subject to periodic sabotage); continuing difficulties in absorbing liquidity created by oil-financed government spending; some dollarisation; first issues of sukuk in 2011 to help fund fiscal deficits and aid control of Islamic banks; adjustments to benchmark minimum bank deposit rate gradually become more important; political tensions which had been present since early 2000s erupt into more serious armed conflict in late 2014; statistical database poor but some improvements; | loosely structured discretion LSD |
| 2015-17 | [Note: no Article IV reports after July 2014, little information available from other IMF reports]
onset of serious armed conflict has devastating effect on economy, disables many government and central bank operations, and effectively postpones projected economic and monetary reforms |
unstructured discretion UD |
Selected IMF references: RED 1992 pp23-4, 33-4; SR 1992 pp2-5, 10-12, 15; RED 1995 pp24-6, 40-3; RED1997 pp7-9, 33-4, 41-3; SR 1999 pp15, 16, 18-20; SI 2001 pp29-31, 38-42, 44-6, 52-5, 80-4; SR 2002 pp23-4; SI 2003 pp32-6; SR 2003 pp19-22; SI 2006 pp5-6, 35-45; SR 2007 pp7, 10, 13; SR 2013 pp6, 12, 17, 43-4; SR 2014 pp20-22; Arab Countries in Transition: Economic Outlook and Key Challenges, October 2015, pp18-19; Regional Outlook: Middle East and Central Asia, November 2018, pp9-11.
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Monetary Policy Frameworks 