Saudi Arabia decided on Wednesday to deposit two billion dollars in the central bank of Yemen, a day after the head of the newly-recognized government of Yemen asked for urgent financial aid to the country plunged into an armed conflict.
An official statement received by Agence France-Presse that the deposit of two billion dollars will be added to a deposit of one billion dollars, pointing out that this step comes to “strengthen the financial and economic situation … especially the exchange rate of the Yemeni riyal.”
Since March 2015, Saudi Arabia has been leading a military alliance in the impoverished country in support of President Abed Rabbo Mansour Hadi’s authority in the face of the Huthi rebels, whom Riyadh accuses of receiving support from Iran.
Since September 2014, the rebels have controlled the capital Sana’a, prompting the recognized authority to temporarily house Aden. The Authority transferred the central bank to the southern city.
Since the Saudi intervention, more than 9,200 Yemenis have been killed in the conflict, while more than 52,000 have been injured, according to the World Health Organization. But Yemen faces financial difficulties both in Sana’a and Aden, and a humanitarian crisis is among the biggest in the year.
On Tuesday, the recognized authority acknowledged it was facing significant financial difficulties, warning that the Yemeni riyal was about to collapse.
“Saving the riyal means saving the Yemenis from inevitable hunger,” Prime Minister Ahmed Obeid bin Dagher said in a statement posted on his Facebook page addressed to the Allies in which he said they should work to “rescue the Yemeni riyal from total collapse.”
“The value of the riyal has declined significantly and every 500 riyals is worth one dollar,” he said.
He called on allied countries to deposit funds at the central bank in Aden, the government’s temporary headquarters in southern Yemen, and to send fuel derivatives.
For his part, Hadi made a phone call to Saudi Crown Prince Mohammed bin Salman, the official Saba news agency reported.
Hadi told the young prince, who is also Jordan’s defense minister, “the current economic challenges facing Yemen.”
The Saudi deposit comes at a time when the kingdom is facing economic difficulties as oil prices have fallen since 2014. The Saudi economy in 2017 contracted for the first time in eight years due to austerity measures.
Saudi Arabia has submitted an expansionary budget for 2018, forecasting the largest government expenditure in its history in an effort to stimulate the stagnant economy, but at the same time estimated the budget deficit to be about $ 52 billion.
