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Saudi Arabia Provides Economic Support Worth USD 1.2 Billion to Yemen

01 Aug

Under the directives and keenness of the Custodian of the Two Holy Mosques and His Royal Highness the Crown Prince, based on the strong bonds of brotherhood and ties between the Kingdom of Saudi Arabia and the Republic of Yemen, in response to the request of the Government of the Republic of Yemen to assist it in addressing its budget deficit, and in support of the Presidential Leadership Council, the Kingdom of Saudi Arabia announced the provision of new economic support to the Republic of Yemen with a value of USD 1.2 billion.
This support is for the Yemeni Government's budget deficit, salaries, wages, and operating expenses and for guaranteeing Yemen's food security. It is in addition to what the Kingdom has previously offered regarding economic and development assistance.

Additionally, it is a continuation of the agreement reached between the governments of the Kingdom of Saudi Arabia and the Republic of Yemen made possible through the Saudi Development and Reconstruction Program for Yemen (SDRPY) within the Republic on 13/08/1441AH. It is part of the Saudi government's role to aid the brotherly Yemeni people, alleviate their suffering, and bolster the Yemeni economy to enable the Yemeni government to fulfil its other obligations.
This generous support comes as a confirmation of the Kingdom's keenness to achieve security, stability and development for the brotherly Yemeni people and as a contribution to strengthening the budget of the Yemeni government, improving the Yemeni economy, and raising the purchasing power of the Yemeni citizen, which will improve the infrastructure, support the essential sectors, and improve the daily life of the Yemeni people.

This support also comes as an effort exerted by the Kingdom to support Yemen in various fields, as the Kingdom provided deposits in the Central Bank of Yemen as part of the Kingdom's support for the brotherly Yemeni people, bringing the total amount provided to the Central Bank of Yemen to USD 4 billion during the period from 2012 to 2022.
The deposits come to improve the daily life of the brotherly Yemeni people, as the Kingdom provided USD 1 billion in 2012 and provided USD 2 billion in 2018 in the account of the Central Bank of Yemen as a deposit designated to cover the import of basic food commodities (wheat grains, wheat flour, rice, milk, cooking oil, and sugar), which contributed to improving the human development index, strengthening the Central Bank's reserves of foreign currencies, a relative reduction of the currency collapse, decreasing in fuel and diesel prices, in addition to improving the standard of living and increasing the growth of the gross domestic product during 2019.

The previous Saudi deposit reduced fuel and diesel prices by about 36% in 2019, and the average cost of the lowest food basket decreased by about 16% in 2018. It maintained its stability until the end of 2019, as well as a decrease in the prices of imported food commodities by about 19% after it reached its peak in October 2018.
The real GDP growth rate during 2018 and 2019 saw a rise of about 0.75% in 2018 and 1.4% in 2019, according to 2022 estimates by the International Monetary Fund.
It also contributed to the rise in foreign currency reserves in the Central Bank of Yemen from USD 900 million in 2017 to USD 2.5 billion in 2018, the increase in total food imports in 2019 by 17% compared to 2018, and the decrease in exchange rates in 2018 by 25%. In 2019, the Central Bank of Yemen stabilized the Yemeni riyal exchange rate by about 500 riyals/USD.
Saudi Arabia's integrated support has contributed to a part of economic efficiency and enhancement of the financial and economic situations in Yemen, mainly the exchange rate of the Yemeni riyal, which reflected positively on the living conditions of Yemeni citizens with stable prices of food commodities, reduced deterioration of purchasing power, reduced inflation and increased expenditure rates, which contributed to the improvement of the Yemeni economy between the fourth quarter of 2018 and the end of 2019.
The Kingdom has played an important role in stimulating economic growth in Yemen by providing grants of fuel derivatives, which are intended to generate electricity for all Yemeni governorates.
These grants from Saudi Arabia aimed at stimulating Yemen's economy and increasing the efficiency of vital, productive and service sectors. In 2021-2022, the total support for oil derivatives was about 1,260,850 metric tons for operating more than 70 Yemeni stations, with a value of USD422 million, distributed in various Yemeni governorates.

The total quantities of fuel supplied to the oil derivatives grant included 511,684,41 metric tons of diesel and 257,955,86 metric tons of mazut, which contributed to alleviating the burden on the Yemeni Government's budget, reducing the Central Bank of Yemen's use of foreign currency reserves for the purchase of oil derivatives to generate electricity from global markets by reducing fuel sale prices from global electricity generation prices by 79% for diesel, 94% of the mazut by 3,898,608 barrels of diesel and 1,928,887 barrels of mazut.
The total quantities of energy produced amounted to 2,828 GWh, which contributed to an increase in the operation of average electricity hours in several governorates, where the rate went up by around 20% in Aden, which would increase trade traffic by increasing working hours in shops and markets.

It also contributed to the creation of approximately 16,000 new job opportunities and the stimulation of logistical movement in transport services through the movement of ships, as the number of ships for internal transport reached 21 while the number of tankers reached 9,928 tankers. It also increased the number of electricity subscribers by approximately 9,377 subscribers, and the number of grant beneficiaries reached 9,837.

The Kingdom of Saudi Arabia directly assisted the Republic of Yemen as part of a development assistance package granted by the Gulf Cooperation Council (GCC) states to sustain and boost economic growth from 2012 to 2014.
During the years 2019 and 2022, the Kingdom of Saudi Arabia's economic and development support and reform package contributed to improving the financial situation, including the Saudi oil derivatives grant, which contributed to reducing expenses and the burden on the government budget, resulting in a reduction of the deficit rate from -38% to -23%, in addition to deposits provided to the Central Bank of Yemen, which contributed to supporting the economy.
The Kingdom, through the Saudi Program for the Development and Reconstruction of Yemen, has provided 229 development projects and initiatives since 2018 in 14 Yemeni governorates in 7 sectors, namely: education, health, energy, transport, water, agriculture, fisheries and government institutions, in addition to development programs, which contributed to improving infrastructure, essential services and job creation.

Since 2018, the Kingdom has provided 229 development projects and initiatives in 14 Yemeni governorates in seven sectors, namely education, health, energy, transport, water, agriculture, fisheries, and government institutions, in addition to development programs that have contributed to improving infrastructure, basic services, and job creation through the Saudi Development and Reconstruction Program for Yemen (SDRPY).