Saudi Arabia to deposit $1 billion in Yemen’s central bank: official

Saudi Arabia will give $1 billion to Yemen at a donor conference in Riyadh next week, a Yemeni minister said on Wednesday, to support Yemen’s currency as the country tries to recover after more than a year of turmoil.

The money will be placed as a deposit in the Yemeni central bank, Planning and International Cooperation Minister Mohammed al-Saadi said in comments on state news agency Saba, adding an agreement will be signed at a donor meeting in Riyadh on Tuesday.

“The Saudi Development Fund’s initiative aims to support the stability of the currency and strengthen government efforts to face economic challenges,” he said.

In May, wealthy Saudi Arabia already pledged $4 billion in aid for Yemen during the Friends of Yemen meeting held in Riyadh.

But so far only 43 percent of $455 million earlier asked for by the U.N. and other organizations has been received for humanitarian aid for Yemen.

The minister said the conference will also address reconstruction, humanitarian needs and ways to strengthen security and stability in Yemen including political dialogue, preparations for general polls and basic infrastructure needs.

“There are countries that will announce pledges in Riyadh. Those who cannot, will make their pledges in New York,” at the Friends of Yemen meeting next month, he said. The conference in New York will take place on September 27.

Yemen needs $11 billion

The minister also said that country needs $11 billion in foreign aid.

“Our needs are $14 billion. The Yemeni government can cover some part, but there remains a gap of $11 billion.”

Yemen is undergoing a political transition after a year-long uprising unseated veteran leader Ali Abdullah Saleh and left the economy of the Arabian peninsula’s poorest country in shambles.

The unemployment rate has shot above 50 percent in a country where some 42 percent of the population of 24 million live on less than $2 a day.

The Yemeni rial’s market rate, meanwhile, has stabilized at about 205-210 to the dollar this week, compared with about 243 at the height of the political crisis. In previous years it has traded below 200, and the subsequent depreciation and inflation have compounded food emergencies in a country with a per capita annual income of just $2,300.

The IMF says the 2011 political crisis has taken a serious toll on the economy, which it said contracted by 10.5 percent, while inflation soared to 17.6 percent.

Aid agencies say nearly half of Yemen's 10-million population do not have enough food to eat, and one in three children is severely malnourished.

The Friends of Yemen forum was set up at an international conference in London in January 2010 to help Sanaa combat a resurgent threat from Al-Qaeda in the ancestral homeland of its slain leader, Osama bin Laden, as well as other security challenges.

Qaeda has taken advantage of a nearly year-long uprising which led to president Saleh stepping down in February to seize large swathes of the south and east of Yemen.

A local official said on Wednesday that five suspected members of Qaeda were killed in a drone strike on their vehicle in southeastern Yemen.