Yemen's aid exodus

A Yemeni official report warned of an "economic catastrophe" as a number of donor countries and international organisations freeze aid to the country.

The announcement comes during a time of deteriorating security and collapse of state authority in Yemen following a coup by the Houthi militia group in January.

Donations on ice

During donor conferences held in Riyadh and London in 2012, Yemen was promised $7.9 billion in aid, with Gulf neighbours pledging the most generous amounts.

More than two years later, Yemen has received only 60 percent of the promised aid packages, according to the country's executive bureau.

An annual report published by the bureau predicts that if the current political crisis continues, it will likely prompt more donors to stop their aid and external loans to Yemen.

The report also suggests that political and security challenges in 2014 have negatively impacted on economic activity in the country.

"This could subsequently lead into catastrophic impacts on the social and economic situation of Yemen, especially with the aggravating deficit in the public budget," the report states.

"These impacts will include halting public investment, increasing pressures on the balance of payments and foreign currency reserves, deteriorating the value of the national currency, increased inflation, poverty and unemployment rates, and worsening Yemen's humanitarian indicators."

Projects cancelled 

Mujahid al-Musabi, the bureau's partnership and communication analyst, said that given the current security concerns it would only be natural for donor countries to halt aid to Yemen.

Last week, the World Bank, which funds $1.1 billion worth of projects in Yemen, announced a halt to operations in the country due to the deteriorating security situation.

The World Bank said that its employees were unable to carry out their work or communicate with their government counterparts given the political turmoil in Sanaa.

The World Bank, which funds $1.1 billion worth of projects in Yemen, announced a halt to operations in the country.

Yemen's capital has been living in a state of political and economic isolation from the rest of the country since the Houthis took over Sanna in September 2014, and other areas in Yemen.

The coup in January by the militant group forced foreign embassies and a number of international companies to leave the country.

Speaking on conditions of anonymity, a government official said that the international donors are deeply concerned about the current situation in Yemen.

Monetary flight 

The country has effectively been torn in two, with dual capital cities - Sanaa controlled by the Houthi movement, and Aden in the south controlled by southern separatists and forces loyal to the internationally recognised president, Abd Rabbuh Mansour Hadi.

The executive bureau's report says that the funds pledged by donor countries, especially from the Gulf, are allocated to long-term strategic infrastructure projects, which require a longer period to be executed.

Due to most donors leaving the country, the bureau says it is difficult to get a true assessment of the situation in Yemen.

What is clear is that the country is facing a difficult and severe crisis, which can only lead to lowering living standards, increased rates of poverty, and higher unemployment.

The Yemeni Chamber of Commerce said that the situation has ked to 100 Gulf-led investment projects being cancelled.

In a report issued in February, Unicef Yemen warned that the country's economic situation was on the verge of collapsing, adding that 60 percent of Yemen's 25 million people live under the poverty line.

This article is an edited translation from our Arabic edition.