The Houthi militia demanded half of the new banknotes in exchange for allowing them to be used
English - Thursday 24 June 2021 الساعة 03:35 pm
Aden, NewsYemen, Exclusive:
A senior banking source confirmed that the Houthi militia asked the legitimate government to hand it over half of the total banknotes of the new edition, 1,000 riyals, of the 2017 edition, in exchange for lifting the ban on it and allowing it to be used in areas under its control.
The source, who works as an executive director in a government bank, told NewsYemen that the legitimate government and the Houthis reached a settlement at the beginning of this year, issuing the “1000” riyal banknotes, the 2017 edition, the size of the old denomination, and withdrawing the same small-sized denomination from market.
The source explained that the Houthi militia accepted the settlement, and agreed to lift the decision to ban dealing in printed currency after 2016, which is of small size in its areas of control, in exchange for sharing the printed currency between the two heads of the Central Bank in Sanaa and Aden.
He added that the legitimate government refused to hand over 200 billion riyals to the Central Bank of Sana'a, which is under the Houthi militia's authority, half of the newly printed amount of 400 billion riyals, under the pretext that the Houthi militia refrained from supplying the revenues of the areas under its control to the Central Bank of Aden.
He continued, the Houthi militia responded to the government's refusal to hand over the central bank to Sana'a, half of the amount of 200 billion riyals, with a decision to extend the ban on dealing with the new edition, and considered the denomination of 1000 riyals in which the serial number begins without the letter (A) forged.
The Houthi militia announced its ban on new publications of banknotes on December 18, 2019 to include the banking and commercial sector and citizens, with a political aim, to pressure the international community to share publications and credits between the Sana’a and Aden centers.
The Houthi militia’s ban on dealing in new banknotes has caused a widening difference between the value of the riyal in areas under the control of the Houthis and the government by about 56 percent in the value of the local currency, due to the paralysis and stagnation of the banking sector in the Houthi militia-controlled areas.
Following the transfer of the headquarters and operations of the Central Bank from Sana’a to Aden on December 16, 2016, the Hadi government signed with a Russian company to print 2 trillion riyals, in denominations of “1,000, 500, 200, 100” riyals, to meet the budget deficit, with resources drying up due to the war.
The total printed currency in denominations of 1000 riyals, with the same sizes as the old edition, amounted to 600 billion riyals, which were issued to the market in 2017, and are currently circulating in the Houthi militia-controlled areas.
As for the rest of the total currency printed under the decision of the Central Bank of Aden, which bears the same denomination and other denominations, but with a smaller size - which is covered by the Houthi militia ban - in addition to the 400 billion riyals new denomination of 1000 riyals, of which 60 billion riyals were recently exported to the market.
The Houthi militia’s demand to share the banknotes of the new edition with the Central Bank of Aden is not new, but dates back to 2018, when the militia requested half of the new banknotes and half of the Saudi deposit, with the aim of putting pressure to return the headquarters of the Central Bank to Sana’a.
Although the Houthi militia’s ban on dealing in the new banknotes was a decision for political goals, and outside the Houthi militia’s economic calculations, this decision headed toward an economic direction, and had social, economic and commercial repercussions on the population, with the weak capabilities of the legitimate government’s economic institutions.
