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Reports: Saudi Arabia to deposit $1 billion in Yemen’s central bank

The European Union also announced additional funding for Yemen, while a famine watchdog said that economic warfare is increasingly causing hardship for Yemenis.
Backers of the the Southern Transitional Council (STC) which seeks independence for south Yemen, stand guard outside a bank in the Crater district in the centre of Yemen's second city of Aden on August 12, 2019. -  (Photo credit should read NABIL HASAN/AFP via Getty Images)

Saudi Arabia will soon give $1 billion to the internationally recognized Yemen government, according to media reports published on Tuesday. 

Reuters reported that the kingdom will deposit the money into the government’s central bank based in Aden. The move is in response to Yemen’s weak currency and high fuel and commodity prices, according to the outlet. 

Bloomberg later confirmed the news. The Saudi Embassy in Washington did not respond to Al-Monitor’s request for comment. 

Background: Yemen's civil war began in 2014 and has led to two rival administrations in the country: the internationally recognized government based in Aden, and the Houthi rebels based in Sanaa. Iran supports the Houthis while a Saudi-led coalition backs the government. A cease-fire between the two sides ended last October. 

Saudi Arabia has carried out an extensive bombing campaign in Yemen in support of the government. Houthi forces have also carried out drone attacks on Saudi Arabia and the United Arab Emirates. 

Why it matters: Yemen has been experiencing shortages of foreign currencies, including US dollars, as well as the devaluation of its own currency for years. Yemen is heavily dependent on food imports, and many Yemenis prefer to keep their savings in foreign currencies. Both factors are driving the currency shortage, Al Jazeera reported last year. 

Saudi Arabia and the United Arab Emirates pledged $3 billion in assistance to Yemen last April amid these difficulties. It is unclear whether the $1 billion injection from Saudi Arabia is part of that offer. 

Yemen is experiencing a litany of other economic issues. Houthi forces have been targeting the government’s oil export activities since the cease-fire ended. The loss of revenue has hurt the government’s ability to pay public servant salaries and provide services. The government has also been delaying clearance to fuel ships to Houthi areas, the US government’s Famine Early Warning Systems Network reported in December. 

There are 17 million people in Yemen who are food insecure, according to the World Food Program. 

On Monday, the European Union allocated 193 million euros ($205 million) in funding for vulnerable people in Yemen. Part of the funds will go toward addressing food security, according to a press release. 

Know more: In August, Saudi Arabia pledged to invest $1 billion in the Pakistani economy. Like Yemen, Pakistan is also suffering from foreign currency shortages.

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