A delegation from the Central Bank of Yemen (CBY), led by Dr. Monassar Al-Quaiti Governor of CBY and Mr. Abbas Al-Basha Vice-Governor, attended the 2016 Annual Meetings of the IMF and the World Bank Group in Washington DC from October 3-9, 2016. Productive consultative talks were held with the IMF’s Yemen mission team, and the delegation met as well with US government officials on the margins of the Annual Meetings.
The visit to Washington comes as part of CBY’s efforts to obtain technical assistance and mobilize donor resources. CBY has faced crippling challenges since last year, such as the fast depletion of its hard currency reserves, maintaining independence while operating under Houthi controlled Sanaa, suspension of foreign assistance and most recently, severe shortage of national currency stock in the central bank’s accounts. The shortages of currency in the accounts of CBY lead to its inability to honor payment of government salaries since July 2016. In addition, the fast depletion of the bank’s foreign exchange reserves rendered the bank not only incapable of fully servicing its external debt obligations, but also unable to subsidize the exchange rate for food and other vital goods imports.
Against the backdrop of the above-mentioned challenges, which have been endangering the well-being of the public and escalating the humanitarian conditions, the President of the Republic of Yemen undertook the decision to relocate the operations of the central bank to Aden in addition to appointing a new governor and a vice governor of the bank. It is worth noting that the legal term of the former board of directors of the central bank expired on August 6th, 2016. The new leadership of CBY will operate from Aden using the existing institutional structure, payment system and financial infrastructure that is currently connecting the branches of the central bank, including Sanaa’s.
The Central Bank of Yemen has shared with the IMF and the World Bank a short-term strategic plan that addresses the bank’s pressing objectives. CBY is committed to resolving the bank note liquidity crunch to expedite the payment of government employees’ salaries across all governorates. CBY has already taken the necessary steps to issue bank notes with the aim of disbursing them throughout all central bank branches. This disbursement will enhance the ability of CBY’s branches to meet their outstanding obligations, including payment of salaries, which is consistent with the government’s economic policies and in line with the government’s 2014 budget.
CBY is also working jointly with the Government of Yemen to mobilize resources from the international and regional donor community to replenish the external accounts of CBY. Replenishing the reserves is essential to resuming the import financing of food and other core commodities. Additionally, replenishing the reserves will ensure that Yemen fully meets its external debt obligations and outstanding letter of credits for food imports. Limited exports of hydrocarbon products have already been initiated from Masila, Hadramout, and revenue from the sale of hydrocarbon products is expected to start flowing to the external accounts of CBY.
CBY is committed to ensure the economic and financial stability of Yemen and aims to improve the poor humanitarian conditions. At the conclusion of CBY’s visit to Washington, Governor Al-Quaiti acknowledged the IMF and the World Bank for their positive collaboration, their valuable advice and technical assistance.
Central Bank of Yemen