Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

Yemen Central Bank Governor to Asharq Al-Awsat: Saudi Grant Has Had Positive Impact

Yemen Central Bank Governor to Asharq Al-Awsat: Saudi Grant Has Had Positive Impact

Friday, 4 January, 2019 - 07:15
A soldier checks a car at the gate of the Central Bank of Yemen in Sanaa May 5, 2014. (Reuters)
Jeddah – Saeed al-Abyad
Yemen’s Central Bank has managed to activate all of its tools since receiving the Saudi grant in March last year.

Central Bank Governor Mohammed Zammam told Asharq Al-Awsat that the grant has been invested in foreign trade, especially basic goods.

The grant has left a “clear” positive impact on Yemen, he remarked.

In 2018, Custodian of the Two Holy Mosques King Salman bin Abdulaziz ordered that USD2 billion be deposited in the Central Bank. He also ordered an oil derivative grant worth USD60 billion.

All of these grants have had a positive effect on general living conditions, Zammam said.

Some USD352 million of the grant have been dedicated to basic goods, he revealed. This is in accordance to the deal with the Kingdom’s Finance Ministry, which has stipulated that the funds be spent on basic goods.

New banknotes

Moreover, Hammam added that the Aden-based Central Bank will issue new 100 rial banknotes as soon as the 2019 budget is approved.

He said that the salaries of public sector employees are a burden because any shortcomings in public resources will complicate the approval of a budget.

“We used to tackle the deficit through printing new banknotes. We have since stopped such measures. The deficit will be addressed through deposits,” he explained.

UN role

On the role the United Nations can play in Yemen, Zammam said that it has been restricted in providing foreign aid.

He revealed an agreement had been reached with UN Secretary General Antonio Guterres on using the Central Bank as the only official means for financial transfers.

This will have a positive effect on the country, he added.

Moreover, he stated that the International Monetary Fund had reviewed the Yemeni budget in late 2018 and recommended all donor countries and organizations to cooperate with the Central Bank because that will help stabilize the rial.

Smuggling of funds

Zammam noted that the Iran-backed Houthi militias do not have the means to print banknotes and their illicit monetary practices, such as smuggling, are negatively affecting the state’s financial policies.

All concerned agencies are cooperating with the Central Bank to ensure that funds are transferred through official channels, he added.

Cooperation has been underway with neighboring countries to track Houthi smuggling operations.

Zammam continued: “The Central Bank has taken a number of measures in the past two months that have directly improved the local currency.”

Editor Picks