Saudi Arabia has deposited $1 billion into Yemen’s Central Bank to support the country’s economic reform programme. This move aims to strengthen the efforts of the Yemeni government to build up reserves at the Central Bank of Yemen and enhance economic stability. The initiative has been welcomed by the Head of Yemen’s Presidential Leadership Council, Rashad Al Alimi, and Central Bank Governor Ahmad Ghaleb.
Yemen’s economy has been struggling with a shortage of foreign currency, which is mainly obtained through the export of crude oil through Hadramawt and Shabwah ports that have been under threat due to Houthi attacks. The Houthis have been in control of the Yemeni capital, Sanaa since 2014. Since then, Saudi Arabia has been leading a coalition to fight against the Houthis.
The country is currently in a state of no-war, no-peace stalemate, and active fighting has largely stopped among the warring sides, despite the breakdown of a UN-brokered truce in October. The situation has resulted in economic turmoil and hardship for the Yemeni people, with the Aden-based government raising the US dollar exchange rate used to calculate customs duties on non-essential goods by 50 per cent last month amid dollar shortages, sending prices to all-time highs.
The Yemeni government has been resorting to money-printing to finance the deficit, but in Houthi-held areas, where new notes are banned, the exchange rate is around 600 rials to the dollar, causing further economic hardship for the people. The deposit by Saudi Arabia into the Central Bank of Yemen is expected to help alleviate the country’s economic woes and provide a path towards economic stability.
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