Central Bank Governor: Currency printing caused a "setback" to the economy
English - Tuesday 13 June 2023 الساعة 06:15 pm
Aden, NewsYemen, exclusive:
The Governor of the Central Bank of Yemen, Ahmed Ghaleb Al-Muqabi, denied recent rumors about the depletion of the bank's reserves of hard currency, despite the loss of the public treasury in revenues of hundreds of billions.
The governor responded, in an interview with Yemen TV channel, to these news, that the bank's reserves of hard currency are "better than they imagine," stressing that it enables it to carry out its basic functions by preserving the stability of the local currency and maintaining prices within possible limits.
He said that the bank's currency reserves, which he described as strategic, in the form of deposits and investment portfolios in international banks, can only be used in difficult times, stressing that "the difficult time has not yet come."
Pointing out that the Saudi deposit, estimated at one billion dollars, was fully deposited in the bank’s accounts a day after it was signed last March, while 300 million dollars were deposited from the UAE deposit, estimated at one billion dollars.
The governor said that the central bank was able during the 18 months since assuming the position to finance the government budget from non-inflationary sources, referring to the recent report of the International Monetary Fund, which referred to "zero growth in liquidity", meaning that the central bank did not spend a single riyal of printed cash to meet Government expenditures, which created the fragile stability of the economic currency.
He added that the bank was able to do so despite the loss of tax and customs resources as a result of the armistice, which amounted to about 700 billion riyals during this period, in addition to the loss of about one billion dollars in oil exports, whose export stopped from September last year to this June.
The governor of the bank revealed in the meeting that the government’s revenues currently do not exceed 50 billion per month only, which is an amount equivalent to the army and security salaries only, and he added: If it were not for moving the exchange rate of the customs dollar, it would not exceed 25 billion riyals.
The governor of the bank described the currency printing process by the legitimate government as an economic "setback", and revealed that all government expenditures from 2016 to the end of 2021 were covered through the cash issuance of "currency printing," commenting sarcastically that the process was taking place "from the port to the cashier." .
Al-Mabqi explained that the volume of liquidity in the liberated areas amounts to about two trillion and 500 billion riyals, and he said that the bank had succeeded last year in withdrawing about one trillion and 500 billion riyals from the market through auctions and sukuk, but it was forced to return it in the form of expenses to cover obligations such as salaries and electricity fuel.
The Governor of the Central Bank confirmed the absence of an agreed financial policy, and the government's lack of a real budget until today, pointing out that what the government announces are just unrealistic budgets and mere "formalities for the media," as he put it.
Pointing out that the work of the Central Bank and the Ministry of Finance is not currently done through a real budget, but rather just “financial reinforcements,” explaining: all of them are financial reinforcements. Whoever can extract reinforcements from the presidency or the government comes to the bank to spend it.
