Central Aden and saving the currency..between the deposit of one billion and one billion auctions
English - Thursday 23 February 2023 الساعة 04:12 pm
Al-Mokha, NewsYemen, exclusive:
After waiting for 10 months, Saudi Arabia announced, on Tuesday, the deposit of one billion dollars in the account of the Central Bank of Yemen, in light of the economic challenges the government faces due to the interruption of oil revenues.
After the formation of the Presidential Leadership Council in April of last year, Saudi Arabia and the UAE announced support for the economy of about $3 billion, including $2 billion as a deposit to the Central Bank in Aden.
The delay in the arrival of the deposit over the past ten months came due to linking it by Saudi Arabia and the UAE to the implementation of the legitimate government of a number of financial and administrative reforms, which included benefiting from it and correcting the imbalances that the economy suffers from in the liberated areas.
In this context, the Yemeni government signed an agreement worth one billion dollars in late November with the Arab Monetary Fund, with the aim of supporting the comprehensive economic, financial and monetary reform program for Yemen during the period from 2022 to 2025.
Following the signing of the program supported by Saudi Arabia and the UAE, Central Bank Governor Ahmed Ghaleb Ahmed indicated that "after completing the signing of the program and its mechanisms, the transition will take place to discussing the legal aspects of the deposit agreement soon."
The emphasis on the part of Saudi Arabia and the UAE in linking the deposit with financial and economic reform, specialists see as an intuitive realization of the fact that the economic crisis in the liberated areas is in addition to being caused by the circumstances of the war, but the failure to deal with it by the administration, tools and policies contributed to its exacerbation.
On top of these tools, the central bank in Aden comes, around which many question marks revolve, more than a year after the appointment of its current administration following the collapse of the local currency in late 2021 , which amounted to 1,700 riyals per US dollar, and with the announcement of the appointment of the new administration, a decline to about 1300 riyals.
For more than a year, the exchange rate of the US dollar has ranged between this number and 1100 riyals, which the central bank management considers in its official reports as a success in achieving the stability of the local currency.
Fragile stability, as described by specialists, came despite the amount of hard currency cash that the Central Bank has pumped into commercial banks in electronic auctions that it has been holding on an almost weekly basis since November 2021.
The number of these auctions, from its inception until mid-February (14 months), amounted to 66, with total amounts exceeding $1.1 billion, a number that exceeds the number of deposits made by Saudi Arabia on Tuesday.
The absence of the impact of these auctions raises a big question mark about the ability of the current deposit to improve the position of the local currency against hard currencies, in light of the budget’s loss of oil revenues as a result of stopping the export process due to the attacks of the Houthi militia, a loss estimated by the Prime Minister to amount to about one billion dollars.
The bank's management continues the policy of auctions despite the criticism it faces from those interested in economic affairs, who see it as a drain on the bank's reserves of hard currency in favor of commercial banks that are still under the control of the Houthi group in Sana'a, and refuse to move their headquarters to Aden and the Central Bank has no supervision over them. .
Considering that the experience of auctions recalls the imbalance in the financial and banking tools and policies that the legitimacy deals with to confront the economic situation in the liberated areas, which hinders any solutions or interventions to improve this situation and prolongs the economic and living suffering of Yemenis.
