The Arab Monetary Fund (AMF) has offered ordinary and compensatory loans worth $ 205 million to Yemen to support its financial and economic reforms and redress the pressing deficit in balance of payments.

Yemeni Minister of Finance Saker Al-Wajeh and AMF Director General Dr Jassim Al-Mannai signed the agreement for the loans Al-Mannai said the $ 95 million ordinary loan would help Yemen’s financial reform programme from June 2012 to December 2013 by containing deteriorating economic situation, balancing and stabilising macro economy and improving living conditions for realising security, stability and social peace.

The second loan of $ 110 million, he added, would strengthen Yemen’s ability to face the extraordinary economic situation of marked increase in value of agricultural imports due to high prices in international markets and low local production.

He said the two loans carry interest rates between 1.1 per cent and 1.3 per cent with a grace period of more than 30 months.

So far, the AMF has given Yemen 24 loans at the value of nearly $ 1 billion.

The Yemeni finance minister said the two loans would power the development engine.

“The $ 2.5 billion deficit will be financed through government bonds and sukuk and assistance from the AMF, International Monetary Fund and sukuk to be issued by banks,” he added.

The government, he said, had issued sukuk worth $ 233 last month.