In January Saudi Arabia deposited $2 billion into Yemen’s central bank to prop up the weak currency
Riyadh: Yemen’s President Abd Rabbo Mansour Hadi appointed former finance minister Mohammad Zammam as head of the central bank, the state-run Saba news agency reported on Sunday.
Yemen has been divided by nearly three years of civil war between the internationally-recognised government, backed by Riyadh, based in the south, and the Iran-aligned Al Houthi militia which controls the north, including the capital Sana’a.
Its currency, the riyal, has lost more than half its value against the dollar and soaring prices have put some basic commodities out of reach for many Yemenis.
In January, Saudi Arabia’s King Salman ordered a deposit of $2 billion be paid into Yemen’s central bank to prop up the weak currency.
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.
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.