The Central Bank of Aden warns of the government's inability to meet its financial obligations
English - Sunday 14 May 2023 الساعة 09:47 am
Aden, NewsYemen, exclusive:
The Central Bank in Aden warned of increasing pressures on the government's limited resources, with the continued halt to oil exports as a result of the terrorist Houthi militia attacks, more than 6 months ago.
In a meeting chaired by Governor Ahmed Ghaleb at the bank's headquarters in Aden, the bank's management discussed economic developments during the first four months of this year, on top of which are liquidity and money supply indicators, the position of external reserves and developments in public finance in terms of resources, spending and the size of the deficit.
According to the bank's official website, the meeting discussed the implications of the Houthi militia's targeting of oil ports, facilities and tankers, the cessation of oil exports and the consequent pressures on limited resources and an increase in the suffering of the people.
The most important of these effects, according to the bank's management, is represented in "the lowering of the level of many services to their minimum limits and the inability to meet the inevitable obligations, especially aid for students studying abroad and debt service to international financial institutions that provide aid and soft service and development loans to Yemen."
The warnings of the central bank administration in Aden come in light of the large deficit that the government budget suffers from this year due to the suspension of oil revenues, which represent more than two-thirds of public revenues, according to last year's budget.
According to the spending plan for the first half of the current year (January - June) 2023, which was approved by the government in early April, the government budget during this period faces a cash deficit of 472 billion riyals, or 35%, which constitutes a challenge for the government and the bank to cover this deficit without Resorting to inflationary solutions, such as printing currency without cash cover.
This challenge was referred to by the Central Bank's management in its meeting, in which it discussed "the size of the deficit and its financing mechanisms from available, non-inflationary sources in a way that maintains relative stability in the currency exchange rate and price level."
And while the bank’s management called on the government and its central agencies to increase and strengthen coordination with the Central Bank in implementing precautionary financial and monetary policies and to rearrange priorities in a way that helps to overcome the difficult and exceptional circumstances the country is going through, it affirmed its commitment to “the declared precautionary policies and not to allow them to be exceeded, whatever the circumstances.” Except to the extent permitted by law and serving the public interest.
