YEMEN

RISK RATING
Severe
Default High Risk Score 9.00
Normal Average 8.73
Weighted Average 8.72
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Since 2014, the armed conflict in Yemen has been a proxy war between Saudi Arabia and Iran. However, an effective military stalemate and growing US pressure to end the war makes the prospect of a peace agreement in 2021 more likely if Saudi demands for a buffer zone are met and no new sanctions are imposed. The economic and social prospects for the Yemeni economy into 2021 remain uncertain. However, a gradual recovery of global oil prices would help ease the strain on public finances of governorates under the internationally recognised government and reduce the recourse to central bank financing.

  • The internationally recognised government of Abd-Rabbu Mansour Hadi, which was ousted from power in the capital, Sanaa, by Houthi rebels in late 2014, retains a stronghold around the gas-rich region of Marib, while its executive administration resides in Riyadh, Saudi Arabia. Several proto-state entities claim to govern Yemen: the Cabinet of Yemen, Supreme Political Council, and the Southern Transitional Council. The United Nations is working to secure a face-to-face meeting between rival parties, as well as an agreement on a joint declaration that would halt all air, ground, and naval hostilities. Saudi Arabia wants Houthi forces to leave a buffer zone corridor along the Saudi borders to prevent incursions and artillery fire. If the US designates Houthi rebels as a foreign terrorist organisation (FTO), the prospect of peace in 2021 would almost certainly collapse.
  • The world’s largest humanitarian crisis is developing in Yemen, with 80 percent of its people in need of help. The war has resulted in a famine affecting 17 million people. The conflict has also caused the largest, fastest-spreading cholera outbreak in modern history. The UN averted a massive famine in 2017, however in 2020 the pandemic has dried up international funding for food aid. The UN has received less than half of what it needed – about USD 1.5 billion – in 2020 for its humanitarian operations in Yemen. In 2019, it received USD 3 billion. As of 2020, the country is placed the highest in Fragile State Index. Yemen is also the second worst ranked country in the Global Hunger Index, only being surpassed by the Central African Republic.
  • A ban on the circulation of new banknotes in Houthi rebel controlled areas has caused serious repercussions to the country’s economy which has been deteriorating due to a drop in oil exports, the downsizing of humanitarian support, and devastating torrential rain and flash floods. In November 2019, the internationally recognised government of President Abdrabbuh Masur Hadi printed new banknotes to replace old ones. However, the Houthis have banned their use and exchange in areas under its control. Distortions created by the fragmentation of institutional capacity and the divergent policy decisions between the areas of control, have further compounded the economic and humanitarian crises. The World Bank says that lifting of restrictions of access to supplies and fuel imports through Hodeidah would improve the provision of public services and the operational environment for humanitarian operations.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
9.0
Expropriation, Nationalisation, Confiscation & Deprivation
8.0
Contract Frustration & Breach
9.0
Taxation
9.0
Bribery & Corruption
9.0
Regulatory Burden
9.0
Strikes, Riots & Civil Commotion
8.0
Security
8.5
Sovereign Default
9.0
Economic Volatiliy
8.8

Risk Rating Scale (small)

Severe
High
Elevated
Moderate
Low

Risk Score BTN

SECURITY MONITOR

ACLED DASHBOARD

MEDIA MONITOR

View Media Monitor BTN

RELATED ARTICLES