Yemen’s drained central bank stops cashing govt employee salaries
Meanwhile, banking officials said the central bank suffers from a lack of liquidity after Houthi militias drained the bank’s foreign exchange reserves
Yemen’s central bank refused to receive the delegates of governmental institutions and ministries on Sunday and stopped paying out dues and salaries of government employees due to lack of liquidity, banking sources in the capital Sanaa said.
Meanwhile, banking officials said the central bank suffers from a lack of liquidity after Houthi militias drained the bank’s foreign exchange reserves, adding that there was a daily deficit amounting to $380 million as a result of not collecting taxes and a steep decline in fiscal revenues.
A governmental report submitted by Yemeni Finance Minister Munser al-Quaiti to ambassadors of donor countries within the context of the Kuwait peace talks two weeks ago said the Houthi militias seized $1.6 billion of foreign exchange reserves during the past 16 months under the excuse of “war efforts.” The amount withdrawn was $100 million a month, he added.
The report said the bank’s cash receipts reached $187 million while daily expenses reached $570 million – leading to a deficit of $383 million.
It said that foreign exchange reserves at the Central Bank were $5.25 billion on the eve of the Houthi coup in September 2014, adding that these funds were drained by the militias. Only a reported $1.25 billion remains in the bank’s treasury.
Governmental employees said Houthi militias’ committees which control state institutions and ministries told them there will be a delay in paying their dues until after the Eid al-Fitr’s holiday which marks the end of Ramadan.
Financial experts said the central bank’s lack of liquidity is due to militias withdrawing huge amounts of money. The finance minister’s report estimated that $1.5 billion have been cashed out and kept outside the bank. The report added that these funds are being used in the Sanaa and Hodeida governorates which are under the Houthis’ control.
This article was first published on the Arabic website of Al Arabiya News Channel on July 4, 2016.