Faced with a mounting struggle to wean Yemen off its reliance on the diminishing oil sector, which contributes the bulk of export and fiscal revenue, the government had stepped up efforts to impose fiscal austerity. However, these efforts, which included passing a contractionary budget for 2011 and implementing a ten-point reform programme, will be superseded for the time being by the urgent desire to quell the spreading protests. In an attempt to appease demonstrators, the government has implemented several economic support measures-including raising the wages of public-sector workers-that are likely to strain the already stretched public finances. In addition, the programme to phase out fuel subsidies, which began in 2010, is now on hold and likely to remain so for some time.

Yemen will require substantial foreign aid, including the full disbursal of the US$5.7bn promised at a donor conference in London in 2006, if it is to avoid a full-blown economic crisis. However, although the GCC states have gradually overcome their reticence to support Yemen financially, the current weakened position of Mr Saleh will delay any further aid disbursements until his future is clearer. In addition, the economic support plan agreed with the IMF in August has also seemingly been put on hold, in light of the current political uncertainty.