Traders divert Hadi government's economic efforts into financing the Houthi militia
English - Saturday 05 June 2021 الساعة 11:02 am
Aden, NewsYemen, special:
Hadi’s government regained control over managing the economy a year after the Houthi militia coup, but all government efforts to achieve financial stability and economic recovery were undermined by the commercial and banking sector in favor of the Houthi militia.
The government was able to exercise its legitimate right to print the currency "two trillion riyals", receive loans "the Saudi deposit of two billion and 200 million dollars" and oil resources "5 billion dollars" and public resources, and deal with the outside world and international financial institutions.
From 2017 until the end of 2020, the legitimate government pumped about $10 billion into the economy, in addition to expatriate remittances, and the funds provided by the coalition to pay the salaries of military personnel, but today it is suffering from a cash liquidity crisis from the local currency "riyal" and foreign "dollar".
Financial experts confirm that the money that the government pumped during the past four years to the market, "financing the import of goods and employee salaries, central credits, and operating expenses for public services", did not return to the Central Bank - Aden, and ended up in the coffers of merchants and the Houthi militia.
Although the Houthi militia is not related to macroeconomic management and monetary policy, and the transformation of its areas of control into a market for goods and fuel, and the smuggling of goods and banknotes in Yemeni riyals; It sticks its nose into the economy, through its tools, to limit the ability of the legitimate government to implement an effective economic policy at the country level.
Since 2015, the Houthi militia has suspended budget work, salary payments, and suspended operating expenses for basic social services in education, health, water, and electricity, but it still receives taxes, customs, duties, and fees, and controls banks.
The information confirms that most of the companies that financed their import operations from the Saudi deposit from the central bank in Aden, pay taxes and donations to the Houthi militia.
The banks - which benefit from the financing of the Central Bank of Aden - are still paying taxes to the Houthi militia, which are estimated at 30 billion riyals annually, in addition to levies, the war effort and percentages of profits.
The revenues of the Houthi militia from taxes and duties of commercial companies were estimated at about one billion and 800 million dollars, "one trillion and 600 billion riyals" in 2019, according to the report of the United Nations experts on Yemen.
The Houthi militia is also making huge profits from the fuel and medicine trade, telecommunications revenues, car rental companies, and the internal transport sector from the port of Hodeidah to its areas of control.
The Yemeni economy is burdened by the burdens of declining oil revenues and the depletion of the Saudi deposit, and the decline in remittances and humanitarian aid, which weakened the ability of the Central Bank - Aden to stop the decline of the riyal.
Bankers attributed the discrepancy in currency rates between Sanaa and Aden to the dependence of the main importers of food and fuel, who represent some of the largest customers and shareholders in a number of Yemeni banks, on the banking market in the liberated areas of Aden, Marib and Hadramout, to provide their foreign exchange needs.
They stressed that the fixed price of the dollar in the Houthi areas is not due to any monetary or economic policy adopted by the militia, but to the paralysis and suspension of the banking market, "banks and exchange companies", which are unable to meet the requirements of a single importer, but are active through their branches in the liberated areas.
They explained that the evaluation of the price of 1000 riyals of the new banknotes category, with 700 riyals of old notes in the Houthi areas, and the 1000 riyals category of the old and new editions equal in purchasing power in the liberated areas, confirms that the price discrepancy was approved by traders and money changers to compensate for their losses.
Banks and exchange companies resorted to imposing 45 percent on cash transfers from the liberated areas to the Houthi militia-controlled areas, to cover the exchange rate discrepancy between the "fake" Sana'a and the "official" Aden, as it cannot buy the dollar from Sana'a because it is not available.
