CBY Warns Coronavirus, Houthi Intransigence Causing Worst Economic Crisis
Arab World
Jeddah - Saeed al-Abyad
Central Bank of Yemen (CBY) Governor Ahmed Al Fadhli confirmed that Yemen will be facing serious difficulties should the status quo brought about by the novel coronavirus and Houthi intransigence continue. Al Fadhli, in a phone interview with Asharq Al-Awsat, said that the Yemeni economy will pass through a critical stage with the fall of global oil prices. This predicts, according to Al Fadhli, a wider gap between spending and revenues which will in turn affect the budget for 2021. “The Yemeni economy will go through a critical stage, with the collapse of oil prices in global markets, which will have major consequences. The gap between revenues and expenditures will widen and it will be reflected in the 2021 budget, the worst in the history of Yemen if conditions do not improve in the next few months,” Al Fadhli said. The CBY governor pointed out that Yemen's resources have been limited since the coup erupted. Oil production covers around 70% of the public budget. But Al Fadhli explained that the cost of extracting oil from Yemeni fields equals the value of sale in global markets, so there is a shortfall between resources and expenditures. He also stressed that the International Monetary Fund (IMF) had postponed debt service installments for Yemen for another six months. Nevertheless, Yemen had requested a two-year extension on the payments. More so, the Yemeni government faces the problem of the Houthi militia's illegal actions against the national economy. Insurgents continue to seize the properties of many businessmen and impose royalties on citizens. Al Fadhli said that Houthis stopping citizens from using the newly-issued banknotes has also added to the devaluation of the Yemeni Riyal in Aden and messed up the currency exchange process. The plunge of oil prices in global markets is one of the most severe strikes that hit the Yemeni economy. The government was seeking to raise its oil production to about 80,000 barrels per day by the end of the first quarter of 2020. It had projected that the oil and gas sector would cover about 60% of the state's revenues for 2020.
from Asharq AL-awsat https://aawsat.com/english/home/article/2270206/cby-warns-coronavirus-houthi-intransigence-causing-worst-economic-crisis
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