Sanaa, Yemen is grappling with a severe liquidity crisis, exacerbated by Houthi authorities imposing stricter controls on money exchange and remittance services. This financial strain coincides with the Houthi administration's ongoing inability to disburse full salaries to government employees for the fourth consecutive month.
Sources indicate that the Houthi administration, through the Yemeni Money Exchangers Association which it controls, has banned transactions with 31 money exchange businesses. This measure comes amid a cash liquidity shortage that has persisted for over two months. These actions, along with new "correction subscriptions" and restrictions on money exchange operations, are reportedly placing additional burdens on the financial sector. Concerns are mounting that these measures could lead to the closure of branches or the relocation of businesses out of Houthi-controlled areas, potentially disrupting remittance flows and narrowing avenues for cash circulation.
In parallel, media reports from Sanaa suggest that the Houthi administration is also tightening regulations on receiving funds from abroad. Previously, they halted receipts through electronic wallets and limited them to specific exchange companies. There are also reports that the central bank in Sanaa was preparing to impose fees on international remittances before this decision was temporarily suspended. These measures raise fears of increased financial pressure on citizens already struggling to access liquidity and meet basic needs, particularly families reliant on remittances from relatives overseas for food, healthcare, and education.
The liquidity crunch is reportedly linked to the halt in salary payments and significant withdrawals from banks, which are then allegedly deposited with money exchangers to fund "war efforts." While the exact volume and use of these withdrawn funds could not be independently verified, these accusations cast doubt on the Houthi administration's financial resource management, especially given the persistent delays in employee dues and increasing restrictions on financial transactions.
Amidst the liquidity crisis, public criticism is intensifying against Houthi authorities for the continued partial salary payments and the lack of clear explanations for the delays. Activists and writers in Houthi-controlled areas highlight the perceived dismissive treatment of employees and teachers. Concerns are raised about the lack of official statements from key figures, such as the acting head of the government in Sanaa and the Minister of Finance, regarding the prolonged salary delays. This situation is seen by some as a deliberate policy to exert control over employees, although independent financial evidence to substantiate this claim remains elusive.
The ongoing crisis in Sanaa underscores a complex interplay of factors, including cash shortages, restricted money exchange activities, delayed salaries, and tightened controls on international remittances. The repercussions extend beyond difficulties in cash circulation to families' ability to access funds and secure daily necessities. The imposition of new restrictions on money exchange and remittance businesses, without clear projections of their impact on liquidity or transparent data on their outcomes, raises questions about their effectiveness in resolving the crisis and whether they will instead reduce avenues for fund circulation and increase burdens on citizens. As employees await their delayed half-salaries, the public faces tighter restrictions on financial movements, prompting increasing scrutiny of the Houthi administration's management of public resources, spending priorities, and its responsibility to safeguard the basic living rights of state employees.
