Yemen, Republic of Interest Rate Spread

Yemen’s interest‑rate spread widened to 6.83 percent in 2013, placing it 82nd in the World Bank’s global ranking and marginally above Colombia’s 6.82 percent and West Bank and Gaza’s 6.89 percent. The spread reached its highest point of 7.70 percent in 1996, the first year of the 18‑year series, before falling to a trough of 4.50 percent in 2001, a period that coincided with the country’s early‑stage financial liberalisation and the aftermath of the 1994 civil war. Since the trough, the spread has trended upward, reflecting persistent macro‑financial imbalances, limited competition among lenders and heightened risk premiums amid ongoing political instability. The recent widening to 6.83 percent suggests that without substantive reforms to improve credit market depth and sovereign risk perception, the spread is likely to remain elevated, though a sustained improvement in fiscal consolidation could reverse the upward trajectory.