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Saudi Arabia gives Yemen $2 billion

January 17, 2018

The handout comes in response to a desperate plea for cash from Yemen's top officials. War in Yemen has left the economy in tatters and millions of Yemenis facing starvation.

The bombed-out remains of buildings after an airstrike on the capital Sanaa.
Image: picture-alliance/ZUMAPRESS/H. Bamashmous

Saudi Arabia announced Wednesday that it will transfer $2 billion to war-torn Yemen's central bank.

The move comes in response to desperate pleas for funding from the country's president and prime minister a day earlier. On Tuesday, the prime minister pleaded to the international community for help to prop up the country's sagging currency, the rial, and the food supply. Millions of Yemenis are threatened with hunger and starvation.

The rial plunged to an all-time low of 500 to 1 against the US dollar on Tuesday.

"To address the deteriorating economic situation faced by the Yemeni people as a result of the actions of the Iranian-backed Huthi militias, King Salman bin Abdulaziz issued a directive to transfer a $2 billion deposit to the central bank of Yemen, in continuation of the kingdom's support of the Yemeni people," the Interior Ministry said.

An unnamed source familiar with the Saudi government said the money is a gift.

"It's not a loan, it's a deposit and the legitimate Yemeni government will not have to pay it back," the source said.

Yemen, on the southern tip of the Arabian Peninsula, has been torn apart by a civil war that has killed more than 10,000 people and displaced 2 million more since early 2015. The United Nations considers Yemen the world's worst humanitarian crisis.

Riyadh is leading a military coalition that is battling the Houthi rebels in support of Yemen's beleaguered government but has also been accused of compounding the crisis by implementing a blockade of Yemen.

The fighting has left more than 75 percent of Yemenis 27 million inhabitants in need of humanitarian aid while 8.4 million are at risk of famine, according to the United Nations' humanitarian affairs office.

Struggling to meet payroll

Yemen's internationally recognized government, backed by Saudi Arabia, is based in the south of the country, while the Iranian-backed Houthi rebels control the north, including the capital, Sanaa.

Yemen's chaos deepens after death of ex-president – Q&A with Jamie McGoldrick, UN Humanitarian Coordinator

The rial has lost more than half its value against the US dollar and skyrocketing prices have put some basic goods out of reach for many Yemenis.

Yemen's Central Bank is based in the southern port city of Aden and has struggled to maintain the public sector salaries that many Yemenis depend on, particularly at a time when foreign exchange reserves are dwindling.Despite its vast oil wealth, Saudi Arabia is facing a hefty budget deficit. 

Read more: Houthis get ballistic missiles

Yemeni Prime Minister Ahmed bin Dagher posted a letter on Facebook urging the government's supporters to transfer cash to the central bank to "save Yemenis from famine."

bik/sms (Reuters, AFP)