Foreign currency reserves at the Central Bank of Yemen can only cover eight months of imports, a record low for the Arab world’s poorest country.

The country is struggling to cope with an ongoing cash crisis, caused by plummeting oil revenues and an increasingly import-dependent economy.

The central bank’s foreign currency holdings fell 19 per cent between July 2008 and July 2009, from $8.2bn to $6.6bn, it said in a 9 September report.

The bank’s foreign currency reserves were down 4.6 per cent compared with June, falling $317m from the bank’s June holdings of $6.9bn.

Reserves are at their lowest level since 2005. However, the situation is worse than before as the bank only has sufficient reserves to pay for eight months of imports, compared with nearly 14 months in 2005.

Yemen wanted a $2bn bailout from Riyadh before Ramadan, but it has yet to sign an agreement with the Saudis, say diplomatic sources within the country (MEED 7:8:09).