The World Bank suspended its activities in Yemen on Thursday, citing a sharp decline in the security situation as the country grapples with a Shiite militia uprising.
All projects financed by the International Development Association, the Bank's arm for the world's poorest countries, and Bank-managed trust funds have been halted, the Washington-based institution said in a statement.
The World Bank said that a review, begun in early February, found that "the situation in Yemen had deteriorated to the degree that the Bank was unable to exercise effective management over its projects."
The Bank, which has pledged more than a billion dollars to develop the impoverished country, said the disbursement of funds had been suspended.
"This decision was based on a significant decline in the ability of Bank staff to communicate and coordinate with government counterparts, and that many project locations have become inaccessible preventing full fiduciary and management oversight."
The Bank's office in Sanaa, the capital, was closed temporarily in mid-February in response to the deterioration in security.
The Bank said it would continue to monitor the situation in Yemen, highlighting that it remained "fully committed" to supporting the country's development needs and would resume its operations there once suitable conditions are reestablished.
The International Monetary Fund, the Bank's sibling institution, which approved a $553 million loan to Yemen last September, said Thursday that it would continue its cooperation with the country while closely monitoring the situation.
The Shiite Huthi militia seized control of Sanaa last month. President Abedrabbo Mansour Hadi escaped from house arrest in the capital last month and resumed power from second city Aden.
Aden, which was the capital of an independent South Yemen before its union with the north in 1990, is largely in the hands of troops and militia loyal to the president.