Reuters: Yemeni government faces severe financial crisis as Saudi grant delayed

Three sources in the internationally recognized Yemeni government said on Saturday that the government is currently facing an unprecedented financial crisis, which has caused a delay in paying employees’ salaries for two months and an inability to provide fuel for power plants.

The sources told Reuters: "The delay in the arrival of the fourth financial installment pledged by Saudi Arabia, amounting to $200 million, about a month ago, has increased pressure on the government and caused the local currency to decline against the US dollar to its lowest level in the country's history, which is 2,040 riyals per dollar."

A senior official at Yemen's central bank in Aden told Reuters on condition of anonymity that the government was suffering as state revenues fell to their lowest levels ever.

In mid-June, Saudi Arabia deposited about $300 million into the accounts of the Central Bank of Yemen, headquartered in Aden in southern Yemen, as a third installment of the $1.2 billion, one-year grant to support the general budget, which began in August last year.

The official confirmed that the crisis has limited the government's ability to provide fuel to power plants in Aden and neighbouring governorates.

Residents said that the number of hours of power outages in Aden and the southern governorates has risen to 16 hours a day.

The official pointed to "a deficit in the balance of payments that reached its peak due to the severe shortage of government resources and the increased demand for foreign currency to cover the import bill."

Yemen obtains 95% of most of its food needs from external sources.

Source: Reuters