Yemeni economy stands on the brink after oil slump

Yemen depends on oil revenue for 70% of its budget but repeated attacks on the country’s pipeline system have crippled its production and export figures.

Sanaa’s currency reserves have been shrinking since September 2012 when the impoverished Arabian Peninsula nation received a $1 billion loan from Saudi Arabia following frequent attacks on oil pipelines by disgruntled tribal groups.

Its finances have also deteriorated with the government fighting al Qaeda militants and other rebel groups.

Sanaa earned just $149 million from exporting its crude in July, nearly 43 percent less than in the previous month and 36 percent down from the same period last year, the central bank’s monthly report showed.

But at the same time, gross reserves rose 9 percent to $5.2 billion when compared with the previous month. That level is enough to secure five months of imports, up from 4.6 months in June but bellow 7.6 months on average Yemen saw in 2007-2013.

More than 100 people had been killed in four days of clashes between and army troops , triggering the prime minister’s resignation on Sunday. The rebels then signed an agreement with other political parties to form a more inclusive government.

Earlier this month, the International Monetary Fund approved $553 million in financial assistance to Yemen, which the government hopes will bring in more donor funds.

The IMF expected in April Yemen’s budget deficit to shrink to 6.7 percent of gross domestic product this year from 7.1 percent in 2013, which was the biggest shortfall since 2009.