War-ridden Yemen’s other frontline — the central bank

Yemeni bank tellers count money at the Central Bank of Aden in Aden on December 13, 2018.(AFP)
Updated 18 December 2018
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War-ridden Yemen’s other frontline — the central bank

  • The Arab world’s poorest country is crippled by a humanitarian crisis
  • Many have died as a result of poverty, starvation, poor health care as the central bank is caught up in the conflict

ADEN: Cashiers sort through large stacks of money inside a ragged building that is Yemen’s central bank, another frontline in a ruinous conflict as it fights to stave off economic collapse.
The Arab world’s poorest country is crippled by a humanitarian crisis, with images of skeletal children in famine-like conditions grabbing global attention, but economic dysfunction appears to be at the heart of the problem.
Yemen is afflicted by what diplomats call a famine of jobs and salaries, with the central bank — headquartered in the government’s de facto capital Aden.
Running the economy from a building pocked with bullet holes in the southern port city, the bank is scrambling to revive a currency that has lost two-thirds of its value since 2015, exacerbating joblessness and leaving millions unable to afford basic food staples.
The central bank expects a $3 billion cash injection from Gulf donors Kuwait and the United Arab Emirates to prop up its sagging currency amid soaring inflation, its deputy chief Shokeib Hobeishy said in an interview last week, without giving a timeline.
The potential lifeline, if confirmed, would follow a $2.2 billion infusion by Saudi Arabia to the depleted reserves of a bank that appears ever more dependent on international handouts.


Hobeishy acknowledged that the bank was struggling to assert authority over its branches outside government control, including in Sanaa, which was seized by Iran-aligned Houthi militia in September 2014.
The government moved the bank’s headquarters from the capital in 2016 following suspicion that the Houthis were plundering its reserves to finance their war effort.
The relocation practically left the country with two parallel centers of fiscal policy dealing in one currency.
Yemen’s rivals reached a truce accord last week, but conspicuously absent was an agreement on economic cooperation as the Houthis rejected government calls for the Aden central bank to handle public sector salary payments on both sides, a diplomat who attended the talks told AFP.
The central bank is now “arguably the most dangerous frontline in the Yemen war,” said Wesam Qaid, executive director at Yemen’s Small and Micro Enterprise Promotion Service.
“The death toll as a result of bombings or land mines and military operations stands in the thousands,” Qaid told AFP.
“Many more have died as a result of poverty, starvation, poor health care as the central bank is caught up in the conflict.”


Yemen’s economy has contracted by 50 percent since the escalation of conflict in 2015 and inflation is projected at over 40 percent this year, according to the World Bank.
A weakened currency has diminished the purchasing power of millions and the private sector is haemorrhaging with businesses shutting down or making layoffs.
New Prime Minister Maeen Abdulmalik Saeed, appointed in October, said he was seeking to revive oil exports that once contributed about three-quarters of state revenue.
But such are the fears of insolvency that many Yemenis are afraid of putting their money in local banks.
“Banks often say: ‘We don’t have money. Come tomorrow, come next week’,” said a 54-year-old school employee in Aden.
Businesses also criticize the central bank over cumbersome processes to obtain letters of credit for vital imports — in a country that depends almost entirely on food from abroad.
In a letter sent in November to the prime minister and central bank chief, Aden’s chamber of commerce voiced concern that traders in areas outside government control were struggling to import essential goods. A central bank order requires payment in cash only.
The letter, seen by AFP, said the policy had caused a sharp decline in imports in those densely populated areas, making them prone to famine.
On the other side, businesses say the rebels are obstructing traders and banks in their areas from opening credit lines to Aden.
Central bank chief Mohammed Zemam said this month five Sanaa-based central bank employees had fled to Aden over safety fears and were immediately blacklisted by the Houthis.
“We are asking the Houthis to leave the banking sector alone,” he said in a separate interview in Riyadh.
“This is the only way to feed the people.”


Tunisia to almost double gas production this year

Updated 38 min 36 sec ago
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Tunisia to almost double gas production this year

  • The project will be jointly owned by Austria’s OMV and Tunisian National Oil Company ETAP
  • It will include investments of about $700 million

TUNIS: Tunisia will almost double production of natural gas to about 65,000 barrels of oil equivalent per day this year, the industry and energy minister, Slim Feriani, told Reuters on Friday.
The country’s gas output will jump from 35,000 barrels of oil equivalent per day (boed) when the southern Nawara gas field comes onstream in June, Feriani said.
“We will raise our production by about 30,000 barrels of oil equivalent when the Nawara project in the south will start,” Feriani told Reuters in interview.
This project will be jointly owned by Austria’s OMV and Tunisian National Oil Company ETAP with investments of about $700 million.
Feriani also said Tunisia was seeking to attract about $2 billion in foreign investment to produce 1,900 megawatts (MW) of renewable energy in three years. “We will start launching international bids for the production of renewable wind and sun energy. We aim to produce 1,900 MW by investment of up to $2 billion until 2022,” he said.
This would represent about 22 percent of the country’s electricity production.
PHOSPHATE
Tunisia also plans to raise production of phosphate from 3 million tons to 5 million in 2019, he said.
Raising the output will boost economic growth and provide revenue to revive its faltering economy, the minister said.
Phosphate exports are a key source of foreign currency reserves, which have dropped to levels worth just 82 days of imports, according to Tunisia’s central bank.
Tunisia produced about 8.2 million tons of phosphate in 2010 but output dropped after its 2011 revolution. Annual output has not exceeded 4.5 million tons since 2011.
Feriani said lower production has caused Tunisia to lose markets and about $1 billion each year.
Phosphate exports were hit by repeated protests in the main producing region of Gafsa, where unemployed youth demanding jobs blockaded rail transport.