The Financial Crisis of Yemen Hits Food Imports

December 24, 2018

The central bank of Yemen, divided into two rival head offices mirroring a nation divided by war, has been slow on financing the import of food that is needed immediately in order to deflect widespread hunger.

 

In July, Saudi Arabia conformed to lend $2bn to the central bank office situated in the southern port of Aden, which is the seat of the Riyadh-favored government, to assist finance imports of basic goods.

 

The loan would allow importers to trade with Yemeni rials for dollars in order to purchase food for a nation where a debacle in the currency has left many people of not being able to manage basic food stuffs. However, an Aden central bank document that was issued in November, made it evident that only a more than $170mn had been sanctioned for payment.

 

Last week, Deputy Governor Shokeib Hobeishy briefed reporters that the total amount has reached to $340million; however, it was not clear about how much money had reached organizations that want to import food. He stated that they have curbed the regulations that were needed to be completed. However, the opponent central bank which is having its headquarters in Sanaa, did not obtained any funds from the Saudi loan.

 

Traders who previously conducted business through the central bank in Sanaa are now clambering to work through Aden, a shift that has caused many payment problems and hold-up of projects.

 

Some traders stated that the Aden office support government-held areas. Hobeishy dismissed the allegation.

 

The government shifted the central bank to Aden in 2016, alleging that the Houthis of dissipating $4bn of bank reserves during the conflict.

 

In a move that could make bringing food easier, the two sides agreed at United Nations peace discussion last week on a ceasefire and troop pullout from the Houthi-held port of Hodeidah.

 

Hodeidah manages 70% of Yemen’s imports of commercial goods and aid. The World Food Programme said the ceasefire would allow access to 51,000 tonnes of its wheat stocks which was closed due to fighting.

 

The central bank is grappling to pay public-sector wages as foreign exchange reserves slumps. With access to a Federal Reserve account of $200 million; whereas around 87 million pounds are frozen in the Bank of England accounts

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