World Bulletin / News Desk

Yemen, battling political turmoil, aims to achieve economic growth of up to 2 percent this year and meet its budget deficit through foreign aid and borrowing, the country's finance minister said on Tuesday.

"Our aim for 2012 is to sustain it at the way it is, to keep it between 1.5 to 2 percent growth," Sakhar Al Wageh told reporters after signing loan agreements at the Arab Monetary Fund (AMF), a multilateral lending body.

Yemen secured two loans totalling $205 million from the AMF. One, of $110 million, will help the impoverished country finance its balance of payments, while the remaining $95 million is to assist its progress with economic reforms. Yemen has so far received 24 loans totalling $1 billion from the AMF.

The country's economy shrank 10.5 percent last year, the International Monetary Fund estimates, during a wave of protests against the three-decade rule of then-leader Ali Abdullah Saleh. This year, Yemen's army has made considerable progress in recapturing territory, but the IMF predicted in April that the economy would shrink 0.9 percent in 2012.

Wageh said Yemen planned a $10 billion emergency budget for this year and 2013, with a budget deficit of about $2.5 billion.

"The deficit will be covered by financial assistance from the IMF, the World Bank, the AMF, Treasury bills and sukuks (Islamic bonds)," he said.

About a month ago, Yemen raised 50 billion Yemeni rials ($230 million) through a sukuk issue via the country's Islamic banks, he added.

States pledged more than $4 billion in aid to Yemen at a conference in the Saudi Arabian capital Riyadh last month. "Some countries have paid, some are yet to pay," Wageh said without elaborating.

The AMF said it was hopeful that following the accession to power of new president Abd-Rabbu Mansour Hadi in February, the country would recover.

"We are optimistic since the political dispute is settled. There is going to be political transformation and more focus on the economy," Jassim al Mannai, chairman of the AMF, said at the loan signing.