Yemen's financial crisis hits food imports

Yemen's divided central bank is being slow to provide foreign currency to importing countries, exacerbating a food crisis in which millions of people are facing starvation.

ADEN/HODEIDAH, YEMEN (REUTERS) - Yemen's divided central bank is being slow to provide foreign currency to importing countries, exacerbating a food crisis in which millions of people are facing starvation.

In a country torn apart by conflict, the central bank is also divided: one head office in the Houthi-controlled capital Sana'a, another in Aden, home to the internationally-recognised government.

In July, Saudi Arabia agreed a US$2-billion (S$2.7-billion) loan with Aden - giving Yemeni importers access to dollars to buy food.

But an Aden central bank document from November says only a little over US$170 million had been authorised for payment. The bank says that is now US$340 million.

Jonathan Saul, a senior commodities correspondent, said: "If the importers aren't able to access foreign currency that means that, first of all, the goods are not available. But also it's increasing inflation in the economy, and that means for ordinary people the actual value of money, if they have any money left, just gets less and less. We've seen prices also rising for goods so they're being hampered on all fronts."

The cash hold-up is blamed on bureaucracy.

But it's also because most trading companies are located in the Houthi-controlled north, complicating access to the southern central banks funds.

 
 
 

What's also in the north is the ports where most imports enter the country.

The main one is Hodeidah where, since Tuesday (Dec 18), a truce has been in place.

Saul said: "It at least provides a window for what may be possible but there are so many difficulties and there're so many divisions that it is going to be increasingly difficult to translate the truce into something more deep and meaningful - one of which, and this is something the IMF has been urging, is greater cooperation and consolidation between the two central banks which would alleviate not just the humanitarian crisis but also the payment problems being faced. That's a long way off."

Underscoring all this is a population sliding towards famine. Their situation won't improve until imports can flow again into Yemen.