saudi arabia

Saudi Arabia injects $2b to Yemen central bank

Move aims to restore confidence of international donors in the monetary institution

Saeed Al Batati, Correspondent
16:59 November 14, 2017

Al Mukalla: Saudi Arabia has pledged to inject $2 billion into Yemen’s central bank which is currently based in Aden to support the country’s devastated economy and help stabilise the currency.

The internationally–recognised president Abd Rabbo Mansour Hadi said on Monday that Saudi Crown Prince Mohammad Bin Salman would make the injection in order to curb the depreciation of the Yemeni riyal, which has dipped drastically due to the country’s ongoing war.

Riyadh would also buy fuel for Yemeni power plants and pay for basic infrastructure projects in liberated areas.

At a meeting with a government-appointed commission tasked to follow up with reconstruction plans, Hadi said work would be begin in liberated areas starting from January next year.

Shortly after Hadi’s announcement, the riyal briefly bounced back and stabilised at nearly 380 to the dollar compared to 440 last week.

But on Tuesday afternoon, local exchange companies told Gulf News that the riyal dropped again to 425, contradicting initial optimism.

In September last year, Hadi ordered relocating the central bank headquarters to Aden to stop Iran-backed Al Houthis from tapping the monetary authority’s reserves.

The Yemeni government accused the militants of using the money to fund their war effort.

Al Houthis are also withholding billions of riyals in trade tarrifs and taxes coming into the Red Sea porty city of Hodeida which is under their control.

The militia also has siphoned off revenues from state mobile companies and banks.

Monasser Al Quaiti, the governor of the central bank, has said in a statement that the Saudi deposit would secure uninterrupted fuel supplies for one year and would restore confidence of international monetary bodies and donors in the central bank.

He added that the deposit is “the opening salvo” for more donations from the international community.

Hadi’s government has begun combating corruption in state’s institutions and launched crackdown on currency speculation by closing illegal exchange companies in Aden.

Merchants here say they are forced into buying dollars at inflated prices in order to run their businesses of importing goods.

Prices of essential goods such as powder milk, rice, flour have risen sharply over the last couple of weeks as thousands of government servants have not been paid for months.

Economists suggest the government should focus on assigning a team of professional economists to collect revenues and funds.

“Before talking about the [Saudi] deposit there must be a team of efficient economists who will manage the central bank, finance and investment institutions,” Mustafa Nasser, an economist wrote on Facebook.