Arab Monetary Fund approves $1bn support for Yemen

Assistance for reforms comes amid sharp deterioration in the economy after years of war

Bundles of Yemeni riyals stacked at an exchange centre in the rebel-held capital Sanaa. EPA

The Arab Monetary Fund has signed a $1 billion agreement to support Yemen's economic reform programme under the internationally recognised government, Yemeni and Saudi state media reported on Sunday.

The new package by the Abu Dhabi-based fund, which includes countries from the Middle East and North Africa, will provide support for the Yemeni government's efforts to stabilise the economy from 2022 to 2025, Saudi state TV channel Al Ekhbariya reported.

A civil war, triggered when Iran-backed Houthi rebels stormed the capital, Sanaa, in late 2014, has brought Yemen's economy to its knees and caused the world's largest humanitarian crisis.

Inflation and foreign currency shortages have made food, water and fuel unaffordable for many in the country, which imports most of its needs.

Millions of Yemenis have been displaced by the fighting and much of the population is reliant on international aid to survive.

While the Yemeni riyal has been kept relatively steady at around 560 to the dollar in Houthi-controlled areas, it has reached all-time lows in provinces controlled by the government. In the southern port city Aden, which serves as the temporary base of the government, $1 was being exchanged for more than 1,000 rials on Sunday.

After 2014, Yemen’s central bank split into two branches — one in Sanaa, under Houthi control, and one internationally recognised branch in Aden, which has access to money printers and is under the control of the government.

Following a series of Houthi attacks on oil terminals and facilities this month, Yemeni Foreign Minister Ahmed Awad bin Mubarak accused the rebels of targeting the government's economic resources.

“This is a really serious escalation by the Houthis. The consequences of such attacks will impact the Yemeni people negatively,” Mr bin Mubarak told The National.

The attacks followed the expiry of a six-month ceasefire in early October after the Houthis rejected the UN's attempts to extend the truce and broaden its scope.

Saudi Arabia said in April it would arrange $3 billion of support to the war-torn country's economy after a new presidential council was formed. It was not clear if the whole sum has been disbursed.

With reporting from Reuters