Economic paralysis in the Houthi-controlled areas and the citizen are the biggest losers
English - Friday 24 January 2020 الساعة 05:00 pm
aden,newsyemen
The capital, Sana'a, and the areas controlled by the Houthi militia, are in a state of economic stagnation resulting from the decision to prevent the circulation of the new edition of banknotes.
Traders in the capital, Sanaa, said that the buying and selling movement declined to record levels since the Houthi militia announced that it was prohibiting the circulation of banknotes in its new edition, noting that many retailers have decreased their merchandise withdrawals by more than 50% from what they were before the Houthi militia prevented the circulation of the new edition of the currency.
Merchants attributed the cause of the recession to the purchasing power of ordinary consumers due to the effects of the decision on stopping the salary payment by the legitimate government for some sectors in the militia control areas on the one hand, and on the other hand to the lack of liquidity with retailers as well as the fear of large traders and their having to exchange what they have with foreign currencies (Saudi and dollar).
The recession has spread from wholesalers to all other sectors. Owners of restaurants, auto parts stores and other private sectors were affected by the lack of liquidity significantly, and even the matter affected the owners of taxis, some of whom emphasized that the movement of people in the capital decreased by up to 40% due to Lack of liquidity and many of them having to move on public transport to reduce costs.
Although the Houthi militias claimed that the decision would be reflected in positive effects on the prices of commodities and foodstuffs, what happened was the opposite, as commodity prices, especially food, witnessed a significant increase during the last two months, where the price of the sugar bag reached about 16,000 riyals, and in some areas it reached 20 thousand, while the price of the wheat bag increased to 15 thousand riyals, which confirms the negative repercussions of the decision of the Houthi militias.
The decision also caused a liquidity crisis even at exchange company, as the currency (the Yemeni Rial), which was available before the decision, was absent. In contrast, the foreign exchange market, especially the dollar and Saudi Riyal, did not witness the availability of it as it should have been, but rather a disappearance of these currencies.
Bankers said that the decision of the Houthi militias did not affect the exchange rate except in a slight way, as it created a kind of stability in the price of foreign currencies against the Yemeni rial, but it is basically a price that seems illusory, due to the recession, the almost complete stopping of the commercial movement, the lack of liquidity among the people, and the decrease of financial transfers.
Economists point out that the militia decision was taken without realizing or studying the nature of the negative effects that the decision will have on the economic conditions in their areas of control in general and on the lives of citizens in particular, which has become clear during the past two months.
