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Attempts to bring Yemeni currency back to the banking system

A state-owned bank sells about 20 million US dollars at auction

In a move aiming to provide a cash liquidity of the local currency suffering a severe crisis in Sana'a and Aden, the National Bank of Yemen announced on Sunday to sell US dollar amounts in the domestic market through a public bidding.
"Upon request of a competent government agencies, US dollar amounts will be sold in an auction for wishing merchants, companies, exchange houses and commercial banks," the national bank - the only state-owned commercial bank in Yemen- added in a statement published on Friday, December 2nd 2016 «Reuters» quoted a news site close to the power in Aden province that about 20 million US dollars will be sold at auction, but the bank has not specified the amount or source of the money.

Selling Dollar by auction

Local analysts, economists and specialists stressed the importance of state-owned banks' move to sell the dollar amounts in auctions, which contributes to bring the hidden cash liquidity back to the banking system.
They attributed the current liquidity crisis to circulating large amounts of cash outside the banking system.

6 billion riyals outside banks

The estimated increase in currency circulated outside the banking system, during the first half of 2016, is 298 billion riyals, according to «Reuters». And the governor of the central bank estimated it in an earlier interview with "Middle East" at 6 billion US dollars, half of which is damaged.

The governor of Central Bank Qu'aiti said, "we will work to provide additional banknotes, return the trust to the bank and revive the cash cycle to return to normal levels in the circulation."

Delayed salaries crisis

Since three months ago, Yemen has been suffering a crisis of delayed payment of salaries of state's employees, who are one million and two hundred thousand employees in all provinces of the country's north and south, and need 75 billion Yemeni riyals per month. Yemen also suffers a lack of cash liquidity and a sharp decline of public revenues.

The new Central Bank administration said that the administration of rebels squandered billions of dollars and spent large sums of money in so-called "war effort", forcing the government to move the bank's headquarters and operations to the interim capital Aden.

The new Central Bank's governor stressed that the database of staff's salaries are still under the control of rebels and Saleh in the areas they hold, who refused to deliver it to the new administration. They also have not made any backup of the database to face any anticipated conditions, but confirmed that salaries will be paid according to the written data in each branch of the Central Bank in Yemeni provinces.

Decision of the Central Bank move

In last September, President Abed Rabbo Mansour Hadi ordered to transfer the Central Bank's headquarters from the capital Sana'a controlled by Houthis in the north of the country to the southern province of Aden, which is under the control of the legitimate government.

Yemen has been suffering an unprecedented financial crises since rebels seized the capital Sana'a in September 2014, stopping the oil export, which is 70 per cent of the country's revenues, and stopping all foreign aids, foreign investment and tourism revenues.
The Governor of the Central Bank of Yemen has ordered to pay salaries of all state's employees in all Yemeni provinces, including rebel-held areas.

Qu'aiti confirmed, in a statement addressed to managers of CBY and its branches, the importance of adhering to pay the salaries of all state's employees without deduction in all Yemeni provinces, depending on the official statements and directives issued by the Minister of Finance.

He stressed, "these procedures include all areas of the Central Bank of Yemen, including the payment of salaries, government credit, domestic and foreign banking operations, monthly closing reports, control and supervision of banks and financial and administrative affairs."

It is noteworthy that the World Bank has agreed to launch a financial portfolio of rapid and urgent intervention in Yemen with 400 million dollars to provide food, medicine and essential needs of the population.

Signing a document with the world bank

Dr. Mohammed Maitami stated to "Middle East" newspaper in his capacity as Minister of Planning and International Cooperation, before being appointed a few days ago as a minister of commerce, saying, "the World Bank adopted for the first time in its history, a new document for diagonal intervention in Yemen, which has not been applied by the bank since its establishment in 1945». "After long discussions and negotiations between the Ministry of Planning and International Cooperation and the World Bank's team of experts, we came out with a historical document of diagonal intervention, through which the World Bank will go on in Yemen. It is a new approach that was not usual in the approaches of the World Bank in any country of the world," he added.

The document, according to Maitami, says the World Bank will intervene directly at the heart of development issues that ensure the peace and prosperity in Yemen, pointing out that the success of this approach will be circulated to the rest of the world suffering conflicts.

" Resulting from this document, the World Bank launched 400 million dollars for urgent programs in Yemen. As you know, the Bank halted its program in Yemen since March 2015 as it did in many other countries of the world in conflict, such as Syria, Libya and others," he added.

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