The Yemeni government is spending up to YR2bn ($9.9m) a day to quell an uprising by Houthi tribesmen in the north of the country, placing a serious strain on the government’s fragile finances.
Sources close to the country’s finance ministry say figures calculated in November put the cost of pursuing military action in the northern Sadaa province at $3.6bn a year.
This places a serious financial strain on the government. It only raised $9bn revenues in 2008.
Revenues are likely to be far lower because the government’s earnings from oil exports have been hit hard by a combination of lower prices and falling oil output.
Sanaa’s oil earnings were $1.2bn in the first nine months of 2009, down 66 per cent from $3.9bn it made in the same period of 2008.
Yemen asked Saudi Arabia for a $2bn bailout in August to halt a cash crisis, but an agreement is yet to be reached according to sources.
Saudi Arabia wants Yemen to halt the northern uprising, a southern secessionist movement, and the rise of Al-Qaeda in the east of the country.