High oil and food prices..a limited budget surplus in exchange for a large deficit in the import bill
English - Monday 22 August 2022 الساعة 08:58 am
Aden, NewsYemen, special:
An official report revealed that the Yemeni government achieved a cash surplus of about 120 billion riyals during the first half of this year due to the rise in oil prices globally as a result of the Russian-Ukrainian war.
A report issued by the Central Bank on economic and monetary developments for the first half of 2022 said that the state's public revenues during this period amounted to 1,222 billion riyals, an increase of 352.8 percent over last year, compared to expenditures of 1101.8 billion riyals.
The report indicated that the increase in revenues was due to the remarkable improvement in oil revenues, which amounted to 739.3 million US dollars, or about 836.3 billion riyals, an increase of 34% compared to the same period last year.
Non-oil revenues also witnessed a significant improvement, reaching 386.3 billion riyals during the first half of 2022 compared to 114.4 billion riyals in the same period of the previous year, an increase of 271.9 billion riyals, or 237.7%.
Regarding the situation of the local currency, the bank indicated in its report that the average exchange rate of the riyal against the dollar reached 1085 riyals to the dollar in the parallel market in June 2022 AD, compared to 1255 riyals / dollar at the end of December 2021 AD, pointing out that it took a series of measures and reforms to help restore stability in the country. The foreign exchange market, led by the weekly foreign exchange auctions that the bank started in November 2021.
He explained that these auctions, which totaled $537 million until the end of last June, enabled the bank to withdraw liquidity worth 589 billion Yemeni riyals, which constitutes 13.3% of the size of the monetary base, stressing that this is an important step towards effective liquidity management using monetary policy tools based on Open market principles.
Despite the good numbers presented by the report, it presents another picture that is different from that, as the report reveals an increase in the average cost of living index for the food basket in the Republic of Yemen from 56,659 riyals in June 2021 to 83,591 riyals in December 2021, while it recorded 96,414 riyals in March 2022 , which reflects a quarterly food inflation of 15.3% for the period (December 2021, March 2022).
While the report refers to estimates by the International Monetary Fund that the deficit in the balance of payments in Yemen (import volume versus production) by the end of 2022 will reach more than 1900 million dollars, it said that the actual indicators and figures for the first half of 2022 and the rise in fuel and food prices in the global market Large proportions confirm that the deficit during the current year will exceed estimates by high rates and may exceed 3.5 billion dollars.
Warning that this will cause great pressure on the country's limited resources of foreign currency, which poses actual risks to the value of the national currency and the collapse of its value against foreign currencies, noting that this requires more external financial support to enhance the currency reserves, achieve price stability and ensure food security.
