IMF urges Yemen to pay nation wide public sector wages

IMF urges Yemen to pay nation
wide public sector wages
A meeting between the IMF, Yemeni officials and private sector participants in Amman, Jordan took place earlier this month, where the agency urged the government to pay salaries nation-wide.
3 min read
20 July, 2019
The war has shattered Yemen's economy [Getty]

The International Monetary Fund (IMF) on Friday urged Yemen's internationally-recognised government to pay public workers across the war-torn country their salaries, to help revive the shattered economy.

"We urge the government to pay all civil service salaries throughout the country," the IMF said in a statement following a meeting between the agency, Yemeni officials and private sector participants in Amman, Jordan earlier this month.

Most of Yemen's public workers have gone unpaid for months as the country's finances and economy collapsed in the war, which has dragged on for at least four years.

In October, Saudi Arabia said it would deposit $200 million in Yemen's central bank to help stem a slide in the riyal that has sent food prices soaring in the famine-threatened country.

The emergency aid injection was aimed at "stabilising the economy and increasing the value" of the Yemeni currency, the Saudi information ministry said in a statement.

King Salman of Saudi Arabia had "approved a request" from Yemeni President Abedrabbo Mansour Hadi to provide the funds, the official Saudi Press Agency reported.

The oil-rich kingdom, which leads a coalition supporting Hadi's beleaguered government in its fight against Houthi rebels, already deposited $2 billion in the central bank in January 2018 to support the currency, which has lost more than two thirds of its value since the coalition intervened in March 2015.

The new deposit came less than two weeks after the central bank in the government's de facto capital of Aden at the time raised interest rates on deposits to an all-time high of 27 percent after the riyal slid more than 36 percent since January 2018.

The slide saw a sharp rise in food and fuel prices that triggered protests across the government-held south in early September and prompted the government to raise public sector salaries by 30 percent.

The riyal rose on news of the latest Saudi deposit, trading at just under 700 to the dollar in against 820 the previous day, according to money-changers in the rebel-held capital Sanaa.

For more than a year, the government has been unable to pay salaries in the impoverished and war-torn country, as the local currency plummets against the dollar.

But the IMF said economic growth had "moved back into positive territory, albeit now from a much lower per capita income level" after sharp declines in 2014-17.

"Donor financing and increased hydrocarbon receipts were key factors in quelling last year’s dramatic volatility in the exchange rate and food prices, and basic food imports increased toward prewar levels, supported also by humanitarian aid," it said.

In 2016, more than one million civil servants lost their jobs as Hadi transferred the official central bank from Sanaa to Aden.

Houthi rebels operate their own central bank from the capital, which they have controlled since 2014.

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