An imminent financial crisis threatens the improvement achieved by the Yemeni economy
English - Monday 07 November 2022 الساعة 04:39 pm
Mocha, NewsYemen, private:
The Emirates Policy Center said that the areas under the control of the internationally recognized Yemeni government are facing warnings of a new economic and financial crisis that threatens the economic improvement that has been achieved in the past few months.
The center confirmed that "Yemen is back to square one with a new public financial crisis approaching", that the suspension of oil exports, economic reforms, and the failure of the central bank in Aden so far to proactively prevent the imminent downturn, threatens to reverse the course of the relative economic recovery.
The policy paper suggested that the looming economic recession would undermine the government's ability to provide the salaries of its citizens and finance the salaries of public servants, the armed forces and security services.
It also poses the risk of further devaluation of the local currency and pushing it to new lows in government-controlled areas, especially if it turns back to inflationary sources of financing.
It indicated that tensions and social unrest are likely to erupt with the deterioration of living conditions in government areas, stressing that this will undermine the government's ability to maintain security or manage the ongoing conflict with its Houthi opponents.
It is likely that this economic crisis will restrict the government's ability to fulfill its duties towards citizens, continue to pay the salaries of public sector employees, and finance its military and security formations.
In addition to pushing the local currency exchange rate within government-controlled areas towards a further decline, which may reach record levels if the government resorts again to inflationary sources of financing.
She said, the deterioration of the economic and living situation in government-controlled areas will increase the suffering of citizens, and may provoke a wave of tensions and social unrest that weakens the government's ability to secure its areas of control, and negatively affects its ability to manage the conflict with its Houthi opponents.
A remarkable economic improvement has been achieved in the areas under the control of the internationally recognized government in the past months, thanks to the increase in revenues from the export of crude oil, and the implementation of a number of economic reforms.
In addition to the support provided by the Kingdom of Saudi Arabia and the United Arab Emirates, and from international financial institutions interested in the economic and humanitarian situation in Yemen, the government is currently facing the precursors of an economic crisis that may destroy all the improvement achieved on this path.
