Sanaa suburb and mosque in evening

Sana’a, Yemen

The Hadi government is trying to prevent revenues flowing to the Central Bank which remains in Sana’a.  Several southern governors have instructed local institutions to send revenues to an account in a commercial bank controlled by the Hadi government. The prime minister claims that the Huthis have subverted the arrangements — endorsed by the IMF and agreed internationally — for the Central Bank to divert money to the war effort and prevent the flow of funds to the south. Civil servants in Aden were being paid from the Central Bank at least until the end of June. Bin Dagher said that ‘managing the economy, collecting revenues and overseeing the reconstruction are the sole responsibility of the legitimate government’.

The liquidity crisis is worsening with banks insisting on limits to what can be withdrawn in Yemeni Riyals from local accounts which has led to a rise in its value against the dollar. This is coupled with the growing reluctance of international banks to offer credit to Yemeni importers. Around US$260 million in a variety of foreign currencies appears to be stuck in bank accounts because of a break down in relations between local and international banks. International relief agencies view this with consternation: a struggle for control of the central finances will inflict even greater hardship on ordinary people. There are rumours that they may not be enough money to pay salaries at the end of July.

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