Yemen’s drained central bank stops cashing govt employee salaries

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 Aden, Yemen 14/11/2016

Yemen’s central bank’s suspension of salaries of government employees has added to an-already challenging economic situation in the country.

Government employees in Aden were hopeful that relocating the Central Bank from Sanaa to Aden will ease their burden. But the lack of liquidity meant that neither those in Aden nor in Sanaa were getting paid now for more than three months.

Unable to work elsewhere, the employees are not able to support their families in any way, shape or form.

The central bank has been suffering from a lack of liquidity after Houthi militias drained the bank’s foreign exchange reserves, which came on top of a daily deficit amounting to $380 million as a result of not collecting taxes and a steep decline in fiscal revenues.

A governmental report submitted by Yemeni Finance Minister Munser al-Quaiti to ambassadors of donor countries within the context of the Kuwait peace talks in June 2016 said the Houthi militias seized $1.6 billion of foreign exchange reserves during the past 16 months under the excuse of “war efforts.” The amount withdrawn was $100 million a month, he said.

The report said the bank’s cash receipts reached $187 million while daily expenses reached $570 million – leading to a deficit of $383 million.

It said that foreign exchange reserves at the Central Bank were $5.25 billion on the eve of the Houthi coup in September 2014, adding that these funds were drained by the militias. Only a reported $1.25 billion remains in the bank’s treasury.

 

 

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