Both the Yemeni civil war and the Saudi-led intervention have lasted longer than anyone expected or wanted, a point made clear by the toll the conflict is taking on both countries.

At the end of 2015, nine months after Saudi Arabia formed a 10-nation coalition to fight the expansion of Houthi rebels in Yemen, the kingdom — with a gross domestic product (GDP) of more than $700 billion — posted its highest recorded budget deficit, an indication that the war’s economic implications are not to be taken lightly. Meanwhile, Yemen — which recorded its highest GDP at $37 billion in 2014 — saw its GDP shrink by 35% in 2015. War damage estimates stand around $19 billion, and the imminent insolvency of public institutions is expected. Sanaa-based public institutions, including ministries and the Central Bank of Yemen (CBY), remain under Houthi control, whose takeover of the capital in September 2014 led President Abed Rabbo Mansour Hadi to flee the country for Saudi Arabia in early 2015.

In July 2016 due to a liquidity crisis, the CBY suspended financing of all items in the state budget except for public servants' wages and domestic debt payments. The shortage of domestic currency in the banking system is now increasing the risk of a state default on the payment of wages and repayments to domestic lenders.

An August report by the Ministry of Cooperation and International Planning examined by Al-Monitor states that the amount of money removed from circulation in the first half of 2016 totaled 300 billion Yemeni rials (about $1.19 billion), with 44% of that leaving the banking system in June, compared to less than 50 billion rials (around $200 million) exiting in all of 2014. This not only demonstrates, in part, a lack of trust by the public in the banking system in such volatile times, but also gives one an idea of the extent of the shadow economy in the country.