Riyadh agreement bonus: Saudi promises $2 billion in new cash deposit to Yemen

Riyadh agreement bonus: Saudi promises $2 billion in new cash deposit to Yemen

A Yemeni government official told Al-Masdar online of Saudi pledges to provide a new $2 billion cash deposit to Yemen to ensure continued financing of imports of commodities and to maintain the stability of the local currency.

The Yemeni official said Saudi pledges were part of incentives aimed at encouraging the Yemeni presidency to sign the Riyadh accord with the southern transitional council, which calls for secession, in which Saudi Arabia has played the role of mediator and is a diplomatic success for its foreign policy.

Saudi Arabia has linked the successful provision of financial support to talks between the legitimate government and separatist rebels, who have forcibly taken control of the country's interim capital, Aden, where the government is based, the presidential palace and the central bank building.

The Saudi government has promised to hold an international conference of donors from the Friends of Yemen group to receive $2 billion in financial support to cover Yemen's budget deficit, the government official said.

Speaking at an IMF meeting in Washington on Monday, Finance Minister Salem Ben Brik called for supporting Yemen's 2019 budget deficit of $2 billion to maintain the stability of the riyal exchange rate, given the scarcity of state resources and the sharp decline in gross domestic product GDP.

Experts in the economy say Yemen needs a new cash deposit to raise cash reserves abroad and maintain the stability of the local currency, with a previous Saudi deposit of two billion dollars that has drained import financing and only 800 million dollars left.

Youssef Said, an economics professor at the University of Aden, explained in an earlier statement to "Al-Masdar Online" that the previous Saudi deposit is about to run out, and said: We expect our brothers, especially Saudi Arabia, the UAE and Kuwait, to provide the necessary and rapid support to strengthen the reserves of the Central Bank of Yemen with a size of at least $4 billion and to renew the Saudi deposit designed to import food commodities, expand their uses and facilitate their procedures."

In February 2018, Riyadh announced a $2 billion deposit in the Central Bank of Yemen after the Yemeni government demanded urgent financial assistance, according to a statement issued by the International Communication Center in Saudi Arabia, in order to cover imports of goods and protect the Yemeni currency.

Saudi Arabia has been leading a military operation in Yemen since March 2015 against Iranian-backed Houthi rebels, but its efforts have been dealt a heavy blow after another coup against the legitimate government by the separatist Transitional Council (STC) in August.

Saudi Arabia has sought to contain the dispute within the framework of legality by calling for talks between the government and the transitional government in the port city Jeddah, which lasted nearly two months.

Saudi media revealed, early this week, the final version of an agreement between the Yemeni government and the Southern Transitional Council, and indicated that the signing will take place within days in Riyadh in the presence of Yemeni President Abd Rabbo Mansour Hadi, Saudi King Salman bin Abdul Aziz, and the envoy United Nations to Yemen Martin Griffiths.

The five-year war in Yemen has brought oil revenues, customs and tax duties to a halt, putting the finances and government sector of the already poor state on the brink of collapse, and the war and Houthi control of state institutions have led to disastrous consequences for the Yemeni economy.


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