The Yemeni government and the International Monetary Fund (IMF) agreed on August 8 to a 560 million USD loan to Yemen. The agreement comes after the Yemeni government? announced an increase in fuel prices ?on July 30 as part of subsidies reforms. ?The lifting of subsidies comes after yearlong pressure from the IMF, which conditioned its continued financial assistance on these reforms.

The government is fully aware of the difficulties these reforms bring; in the past, attempts to lift subsidies have repeatedly sparked protests in the country. On August 4, thousands took the streets in Sana’a to protest the decision to raise prices. The Houthi movement took the lead in the demonstrations, after the movement’s leader called upon the people to reject the government’s decision. Fishermen in various parts of Yemen have since laid down their work, while bus drivers in Sana’a are on a partial strike.

The protests have placed the transitional government in a difficult position, with protesters demanding that a new government be formed. In June 2014, fuel shortages led to another? protest against the current government . In response, President Abdu Rabu Mansour Hadi reshuffled the?cabinet. Some protesters reacted by calling for reconciliation with previous president Ali Abdullah Saleh, who was removed from power as a result of the 2011 uprising.

Amid fears ?of a coup, Hadi shut down Saleh’s mouthpiece, the Yemen al-Yawm TV channel and laid siege to the Saleh mosque in central Sana’a. These events led to an of tensions between the current and former presidents.

Just days before the fuel subsidies were lifted, Saleh and Hadi met at the Saleh mosque for Eid prayers, in what appeared to be a step toward?. This sign of solidarity may have been an important symbolic gesture in preparation for the difficult reforms ahead.

Given the deteriorating economic situation, the Yemeni government has no choice but to immediately address the dire living conditions of the country’s 24 million people. Without an improvement in the economic situation, social and political stability in Yemen will remain unattainable .