Fiscal Year 2025

Capacity Development Activities

Financial Supervision and Regulation

Enhancing Supervision and Regulation on Capital Adequacy Framework

As part of a multi-step project aimed at a full development and implementation of the Basel III Capital Adequacy Framework, a mission during 9-13 June assisted the Central Bank of Yemen (CBY) supervisors in capacity developing of Basel III Capital Adequacy Framework Pillar 1. The mission presented and discussed the components of Pillar 1, the application of proportionality to regulatory requirements and areas where Yemeni supervisors may exercise national discretion. The review and discussions improved Yemeni supervisors’ understanding of Pillar 1 components and will help them making informed decisions on the development of their own regulation.

Implementing Pillar 1 of the Basel III Capital Adequacy Framework

During September 16-20, METAC supported the Central Bank of Yemen (CBY) in drafting the Pillar 1 regulation and develop corresponding reporting templates, aligning them with the draft regulation. The mission also discussed the regulatory issuance process and stages, and steps needed for conducting a quantitative impact study.

Developing risk management regulations

During October 19-23, a METAC mission assisted the CBY in developing risk management regulations specific to its banking sector. The mission team presented key principles from the Basel Committee, guiding the CBY representatives in identifying significant risks in the Yemeni banking industry that require regulatory focus and specific requirements. The mission team also outlined the necessary approaches and processes to adapt these requirements to the banking industry. Discussions concluded with drafting a regulation framework for the Yemeni banking system, which the CBY representatives will further refine and develop.

Revenue Administration

Support on SoClass and Java computer language skills to enable better use of the ASYCUDA World customs system.

During the week of 6-10 October, METAC provided the Yemen Customs’ IT staff with in-person training (off-site in Dubai), supplemented by a week of online training tailored to specific needs.

Compliance Improvement Plan for the banking sector

In a virtual help desk assignment during 1 July to 30 September, METAC worked with the Yemeni General Taxation Department (GTD) to complete the Compliance Improvement Plan for the growing banking sector. The Compliance Improvement Plan (CIP) is essential for the tax administration to better understand taxpayers and related risks, while identifying effective treatment strategies. Participants discussed critical areas for the CIP, including developing a risk profile for the banking sector, assessing compliance risks, establishing risk criteria, formulating treatment strategies, and considering stakeholder engagement. The discussions were marked by enthusiasm and active participation. The pilot CIP for the banking sector will serve as a model for future compliance programs in Yemen, enabling the GTD to expand its Compliance Risk Management practices to other high-risk industries. Additional IMF remote support will continue through the end of 2024 to assist with the implementation of the banking sector CIP.

Tax Policy

Improving income and consumption tax policy

In response to a request from the Yemeni tax authorities, a joint METAC – HQ virtual capacity development mission during 18-31 August reviewed and assessed the tax system and provided recommendations for revenue mobilizing measures and tax reforms. The mission held discussions with the authorities about ongoing policy reforms and related difficulties, the mission’s recommendations, and the way forward.

Government Finance Statistics and Public Sector Debt Statistics

Compilation of GFS/PSDS data

During 29 September – 3 October 3 a GFS/PSDS in-person workshop and follow-up mission on data compiled for the Yemeni authorities took place in Cairo, Egypt. The authorities demonstrated high-level engagement and sent a 15-member team from three institutions (Central Bank, Ministry of Finance and MOPIC). The workshop assisted Yemeni officials in building capacity for assessing the quality of debt time series, check integration of above-the-line and below-the-line data, review quality and coverage of the compiled GFS and raise awareness of international standards and requirements for data reporting to WB/IMF data bases. Presentations on specific topics were delivered, with an increased attention on the practical demonstration and hands-on work.

Before the in-person mission, a series of virtual meetings with authorities focused on preparing the data, assess inconsistencies and data gaps. The authorities received extensive training regarding the submission process and requirements for Quarterly External Debt Statistics, Quarterly Public Sector Debt Statistics, and the GFS Survey Questionnaire along with preliminary compilation, including data and metadata. Considering the deficiencies detected in the statistical production, the mission presented several techniques for data validation and introduced key concepts for internal work procedures based on best practices from other economies. The authorities appreciated the introduction of these new elements of statistical production and committed to further developing and integrating them within their institutions. The mission will be complemented with virtual meetings of up to 40 (forty) hours between September–and December 2024.