Debt in Yemen

Debt in Yemen is described locally with terms such as دين and مديونية. It can arise from bank or microfinance borrowing, Islamic finance, trade credit, unpaid contracts, guarantees or family loans. Arrears are overdue amounts that remain unpaid after the agreed date. Interest, fees, instalments, collateral, currency and repayment periods depend on the contract, provider and financial zone. Conventional, Islamic, qard-based, community-based and informal arrangements exist alongside one another. Yemen has two financially separate zones. The Central Bank of Yemen in Aden (CBY-Aden) operates under the internationally recognized government, while the Central Bank of Yemen in Sana'a (CBY-Sana'a) acts as a de facto competing authority. They use separate exchange rates and banknotes, and the reach of Aden-based consumer-protection measures outside that zone is not established. CBY-Aden issued consumer-protection instructions numbered 589-20-8-2023 and began a سجل المتعثرين, or defaulting-borrower register, in 2026. Its coverage and interoperability outside the Aden zone are not confirmed. Since 2023, interest-based banking has been prohibited in the Sana'a zone, so contract forms and return models differ by region. Public debt remains in severe distress. The International Monetary Fund's debt sustainability analysis estimated central government debt at approximately USD 9.2 billion on 31 December 2024, equal to about 128% of GDP. It reported roughly USD 6.4 billion in external public and publicly guaranteed debt and USD 3.5 billion in domestic debt, but those figures are not additive because the classifications and arrears treatment differ. A June 2025 estimate put outstanding debt at USD 9.158 billion, with another USD 0.670 billion in arrears and penalties. External arrears were approximately 8% of GDP at the end of 2024. World Bank International Debt Statistics reported a separate 2024 external-debt stock of USD 7.087 billion, including USD 5.665 billion in public and publicly guaranteed debt and USD 0.912 billion in IMF credit and Special Drawing Rights; the differing scopes should be kept separate. External and overall debt distress is assessed as unsustainable. External debt-service payments have largely been suspended since 2014, apart from some International Development Association repayments and IMF-related positions. No confirmed general household or national debt-forgiveness programme has been established. Around 90% of domestic public debt consists of CBY-Aden credit to the state. The remainder includes Treasury bills, Treasury bonds and sukuk. An overdraft was converted into a 30-year bond at the beginning of 2023, with a five-year grace period and 1% annual interest. These public-finance figures do not show the total household or small-business debt stock, which has not been reliably measured nationwide. Formal borrowing is available through commercial banks, Islamic banks, microfinance banks and microfinance institutions. Microfinance banks operate under Law No. 15/2009 and CBY supervision. Many non-governmental microfinance programmes operate under the associations and foundations framework and depend substantially on the Social Fund for Development (SFD). The Yemen Microfinance Network (YMN) represents more than 95% of local microfinance institutions. Yemen has no verified nationwide credit-history, credit-scoring or debt-counselling system. Lenders may request identity and address documents, business or cash-flow evidence, collateral, gold, a guarantor (كفيل) or a pledge or mortgage (رهن). Practice reports also mention a husband or male relative, two witnesses or a pension book, but these are not general statutory requirements for every borrower. Women, internally displaced people, rural borrowers and people with informal income often face additional access barriers. Informal and non-formal credit has substantial practical relevance. Families and friends may lend money, traders and retailers may provide goods or food on credit, and money exchangers or hawala networks may offer arrangements that function like credit. Village savings and lending associations, known locally as جمعيات الادخار والإقراض القروية, provide another community-based option. SFD and CGAP documented more than 360 such groups with about 8,000 members during 2018 to 2021, approximately half of them women. These arrangements generally do not provide standardized disclosures, complaint systems or insolvency protection. A borrower should keep the contract, currency, instalment schedule, collateral terms, fees and receipts. The lender's licence, supervising authority and applicable zone should be checked before signing. When repayment becomes difficult, a written rescheduling agreement, settlement, flexible-repayment arrangement or partial write-off may be available, but these are institution-specific exceptions rather than a general entitlement. For a microfinance-bank or microfinance-institution complaint, the borrower normally contacts the institution first and then the competent supervisory body if the response is inadequate. Civil enforcement is generally governed by Law No. 40/2002. A creditor normally needs a سند تنفيذي, meaning an enforceable title for an existing, quantified and due claim, before seeking execution through the competent Court of Execution or قاضي التنفيذ. A payment order (أمر أداء), designated deposit, accepted surety or settlement can affect the process. A precautionary seizure (الحجز التحفظي) requires judicial involvement; the debtor generally receives at least three days' notice, and a merits and validity action must generally follow within eight days. If the debtor is absent, the seizure notice period is at least five days. A creditor may also seek seizure of claims or assets held for the debtor by a third party. Distribution generally gives priority to maintenance claims, statutory privileges, mortgagees and then unsecured creditors on a pro-rata basis. The claimant usually advances execution costs, which may later be recovered from the proceeds of sale. No reliable nationwide fee schedule or processing time has been established. A creditor may seek a travel ban for a due debt or executable title. In a pre-suit case, the creditor generally has three days to file the merits action. A travel ban can be lifted through creditor consent, a bank guarantee, a solvent surety, a designated deposit or failure to file the action on time. Law No. 40/2002 also permits detention in limited debt cases where no attachable assets appear, the debtor appears solvent and no judicial proof of إعسار or إفلاس exists. Payment, a designated deposit, an accepted surety or a judicial insolvency or bankruptcy finding can support release. Detention carries serious legal and human-rights risks, and practice varies substantially because of the conflict. Commercial insolvency is governed mainly by Book Five of Commercial Law No. 32/1991 and concerns traders and commercial debt. A bankruptcy judgment accelerates monetary debts, stops interest in relation to the creditor body and usually stops individual suits and execution by unsecured or generally privileged creditors. Secured creditors may continue against their collateral. The court and trustee administer the debtor's assets. A trader whose business disturbance is leading to توقف عن الدفع may seek preventive composition, الصلح الواقي من الإفلاس, after at least two continuous years of trading, provided there is no fraud or gross error. The composition may defer payment or forgive part of the debt; a conditional composition may last no more than five years. Rehabilitation can follow full payment or performance of the composition. Specialized Commercial Courts operate in Sana'a, Aden, Taiz, Hadramout and Hodeidah. Ordinary Primary Courts handle relevant matters elsewhere. The competent court, available documents, control lines, travel conditions and local enforcement capacity can materially change access. A household borrower does not have a verified nationwide equivalent of a unified consumer-insolvency or debt-counselling system, so negotiated settlement, documented complaints, legal advice and zone-specific court procedures remain the main documented protections.