Saudi Arabia to inject $1.2bln into cash-strapped southern Yemen

News Desk - The Cradle 

The kingdom has framed its recent deposits to Yemen as aid, despite the funds doing very little to alleviate the crisis southern Yemen is facing

President of the Saudi-backed PLC, Rashad al-Alimi. (Photo credit: Getty Images)

Saudi Arabia approved another $1.2 billion in alleged humanitarian aid to Yemen, anonymous officials told AFP on 1 August, the latest of a number of grants recently provided by the kingdom to the Saudi-backed, internationally recognized government in the country. 

Finance Minister of the Saudi-backed Presidential Leadership Council (PLC), as well as its central bank governor, are expected to announce the grant at a signing ceremony in Riyadh later on 1 August. 

In recent months, the Saudi government has made a number of grants to the PLC, which have mainly been framed by Riyadh as humanitarian donations to Yemen. 

Last month, PLC President Rashad al-Alimi announced a number of Saudi-funded development projects in Yemen’s Hadhramaut province, sponsored by the Saudi Development and Reconstruction Program for Yemen (SDRPY) and amounting to around $320 million.

The SDRPY is a humanitarian fund set up by Riyadh, aimed at providing housing and other services to areas under the control of the Aden-based PLC government. 

In February, the SDRPY injected one billion dollars into Yemen. All funds provided to Yemen by the SDRPY are exclusive to the areas of the country that are under the control of the PLC. 

Additionally, the February deposit sparked anger from those loyal to the Saudi-led coalition, as it was essentially a loan that is required to be paid back at an interest rate of three percent. It was also said to be a violation of agreements between the PLC and the Arab Monetary Fund. 

According to Al-Akhbar newspaper, it will significantly increase Yemen’s public debt. 

Despite this Saudi funding, Aden and the Saudi and Emirati-controlled territories of Yemen are suffering through a severe economic crisis, exacerbated most recently by the collapse of the Yemeni currency last month. 

According to Arab News, the currency received a minor “boost” after the SDRPY February deposit. However, within months, it had begun to devalue once again. 

On top of this, the PLC has been accused of failing to implement crucial economic reforms.

In protest against this looming bankruptcy, Aden’s private electricity providers began boycotting their duties – resulting in widespread blackouts on 27 July. 

Over the past few weeks, the situation has seen protests and riots rock the streets of Saudi-controlled Yemen, coinciding with the collapse of once-hopeful Omani-sponsored negotiations between Saudi Arabia and the Ansarallah resistance movement.