Inflation and its Reflections on the Reserves of Social Insurance Funds in Yemen (2010–2020): An Analytical Perspective

This study aims to analyze the reflections of inflation on the reserves of the Social Insurance Fund in Yemen during the period 2010–2020. The research employed a descriptive–analytical approach through reviewing and comparing official statistical data on inflation rates and the Fund’s investment returns in different financial instruments over the decade. The analysis revealed that the persistent rise in inflation rates led to a decline in the real value of returns from investments in treasury bills, government bonds, and bank deposits, despite the nominal increase in these returns. The findings indicate that investing in treasury bills was not effective in achieving the intended objective of generating reasonable returns with low risk, as inflation eroded both the realized returns and, in some years, part of the real value of the invested principal. Similarly, the results showed that bank deposits between 2017 and 2020 failed to generate positive real returns due to rising inflation. Overall, the study highlights that the investment policy adopted by the Fund was unable to shield its reserves from inflationary risks, raising serious challenges to its financial sustainability and its capacity to meet long-term obligations.