Yemen’s new central bank governor says inherited ‘bank empty of money’

Yemen's new central bank will be moved to Aden in Al Aidarous street.

CAIRO // Yemen’s newly appointed central bank governor said on Thursday he had inherited a bank with no money, a dysfunctional monetary cycle and no working database but salaries would be paid nevertheless.

Monasser Saleh Al Quaiti told the Saudi-owned Asharq Al Awsat newspaper that his appointment had come in time to prevent the rial currency from collapsing after mishandling had led to a depletion of reserves. He pledged to keep the bank independent.

“We have to reverse the situation ... I was handed over a bank empty of money, a monetary cycle that was incapable of circulating and a database that was not existent,” Mr Quaiti said.

“We will solve the salary payment problem, despite the [insurgent] Houthis keeping the database, through information stored in the branches of the central bank in the governorates.”

President Abdrabu Mansur Hadi appointed Mr Quaiti on September 18.

He also ordered the bank’s headquarters moved from the rebel-held capital of Sanaa – controlled by Houthi rebels from the north – to the southern port city of Aden, where his government is based.

“We decided to move the central bank to the interim capital, Aden, in order to save what we could save so that the bank would not reach zero reserves,” Mr Hadi told the United Nations on September 23.

“We call for the support of the free world and its monetary institutions in order to stand by us ... and save the Yemeni economy.”

Mr Hadi is supported by a Saudi-led Arab coalition, which has been trying to roll back gains made by Iran-backed Houthis since 2014 and restore Mr Hadi to power.

His government has accused the Houthis of squandering about US$4 billion (Dh14.7bn) on the war effort from central bank reserves. The Houthis claim the funds were used to finance imports of food and medicine.

A recent report by a UN panel of experts said the Houthis were diverting about $100 million from the central bank each month.

The bank has been keeping the country’s economy afloat after nearly two years of civil war that has destroyed its financial system, according to central bank officials and diplomats.

But the government claimed that less than $700m remains in Yemen’s foreign exchange reserves, far lower than the estimate of $1.3bn in reserves the bank held in June, and down from $5.2bn in September 2014. The halting of oil exports and the inability of the state to collect taxes during the conflict contributed to the financial crisis.

Yemen resumed oil exports last month for the first time since the civil war began in March last year and relies heavily on foreign aid, mainly from Gulf Arab countries.

On September 22, the International Monetary Fund said managing director Christine Lagarde met Mr Hadi and that they had discussed the situation “including preserving the operational capacity of the central bank system so as to improve the financial stability and economic and social outcomes for the Yemeni people”.

Mr Quaiti said: “We had a good meeting with the IMF’s Lagarde and she said the Fund would support the bank if the move paved the way for it to perform its duties, and the IMF and World Bank did not oppose our move.”

* Reuters with additional reporting from Agence France-Presse