Twentythree billion dolars of Yemen's domestic debt
English - Monday 18 January 2021 الساعة 02:34 pm
Aden, NewsYemen, Exclusive:
A source in the Central Bank of Yemen - Aden revealed that the local government debt reached 23 billion dollars, until the end of 2020, which constitutes great pressure on the state budget.
The source, who requested anonymity, said that the government debt of local banks, insurance institutions and government funds is represented in treasury bills or government bonds, their interest, and bank deposits with the central bank.
The rise in domestic debt, in light of the ballooning government budget deficit and its coverage by overdraft from the central bank by printing and issuing the currency without cover, caused the collapse of the value of the local currency, the riyal, and the government development projects and banks stopped financing private sector projects.
A recent economic study recommended restructuring the local debt by engaging in friendly dialogue with local creditors to prolong the maturity period of the debt.
The study indicated that one of the main priority issues for managing public debt and reducing its burdens is the transfer of public treasury functions, including issuance and service of public debt from the Central Bank of Yemen to the Ministry of Finance, and the issuance of a law regulating local government debt from Parliament.
Among the options and policies presented by the study: Debt rescheduling, meaning prolonging the maturities of old debt, lower interest rates, and the face value of old debt instruments.
The study pointed out that rescheduling local debts will be useful to alleviate pressures on the public budget in the short term.
The rapid increase in the size and burdens of domestic debt, to alarming levels, appears, with the central bank in Sana'a and Aden stopping the payment of interest on the local public debt for years, which exposed the local banking sector to a package of challenges.
