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The economy of Yemen is weak and underdeveloped, even more so since the breakout of the Yemeni Civil War which then led to instability and a growing humanitarian crisis. At the time of unification, South Yemen and North Yemen had different but equally struggling underdeveloped economic systems. Since unification, the economy was further harmed by Yemen's support for Iraq during the 1990–91 Persian Gulf War because Saudi Arabia had expelled almost 1 million Yemeni workers, and both Saudi Arabia and Kuwait significantly reduced economic aid to Yemen. The 1994 civil war further drained Yemen's economy. As a consequence, Yemen relied heavily on aid from multilateral agencies to sustain its economy. In return, it pledged to implement significant economic reforms. In 1997 the International Monetary Fund (IMF) approved two programs to increase Yemen's credit significantly: the enhanced structural adjustment facility and the extended funding facility (EFF). In the ensuing years, Yemen's government attempted to implement recommended reforms: reducing the civil service payroll, eliminating diesel and other subsidies, lowering defense spending, introducing a general sales tax, and privatizing state-run industries. However, limited progress led the IMF to suspend funding between 1999 and 2001.
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