Saudi Arabia invests $1B in Yemen’s central bank

Saudi Arabia deposited $1 billion into the central bank of Yemen’s internationally recognized government Tuesday in a bid to bolster the country’s ailing economy, state media said.

In a brief statement, the state-run Saudi Press Agency said the $1 billion deposited into the Aden-based central bank will help the Riyadh-backed administration implement economic reforms.

Yemen’s ruinous civil war, now entering its ninth year, has wrecked the country’s economy and pushed half of the population to the brink of famine. Over 150,000 people have been killed in the conflict.

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The war began in 2014 when Iran-backed Houthi rebels seized Yemen’s capital Sanaa, along with much of the north of the country, forcing the government into exile. A Saudi coalition, including the United Arab Emirates, intervened the next year to try to restore the internationally recognized government. The country’s central bank has since been divided between the warring sides, with the Houthis operating its monetary authority from Sanaa

Rashad al-Alimi, head of the internationally recognized presidential council, thanked the Saudi government for Tuesday’s economic aid in a series of posts on Twitter. Al-Alimi said the money would go toward funding new projects and stabilizing the currency. No further details were given.

Yemen has been hit hard by the fallout of the Ukraine war, with the country having imported 40% of its grain from Ukraine until supply channels were cut following Russia’s invasion. Food prices in Yemen have since surged.

Over past years, the Aden branch of Yemen’s central bank has driven inflation by printing new banknotes to finance debts and cover the cost of public sector salaries. Houthi-controlled areas do not accept notes printed by Aden’s central bank.

Two officials from the internationally recognized government told The Associated Press that the $1 billion aid package will help compensate for the sharp decline in oil revenues in recent months. Oil exports have slowed drastically following several Houthi drone attacks on tankers and other facilities late last year. Both spoke on condition of anonymity as they were not briefed to speak with the media.

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The Arab Monetary Fund, an Abu Dhabi-based group and sub-organization of the 22-member Arab League, will help oversee the use of the $1 billion, the SPA said.

In April 2022, Saudi Arabia and the UAE promised $3 billion worth of aid to the internationally recognized president. It remains unclear whether Tuesday’s deposit is part of that pledge.

Yemen has seen a lull in front-line fighting in recent months, despite the country’s six-month-long formal cease-fire agreement expiring last October. During this period, Houthi and Saudi officials have been engaged in talks seeking to reach a negotiated end to the civil war.