Many parts of Yemen are teetering on the brink of famine as western banks cut credit lines making food import impossible.
As much as $260m held up in foreign currencies in Yemeni banks could not be transferred to foreign banks due to a break down in banking relationships brought about by the ongoing civil war, according to a report by Reuters citing trade and finance sources.
This limitation will require traders to resort to a cumbersome process to import food – they must withdraw the money in Yemen and then send it abroad by air.
Yemen imports staples such as wheat and flour, the absence of which the United Nations said could push many areas of Yemen to fall into famine.
Earlier this month, the Yemeni Central Bank was reported to have stopped paying salaries of government employees due to a falling liquidity.
It is understood that the Central Banks foreign exchange reserves were at $5.25bn when the Houthi rebels staged a coup in September 2014. These funds have been reportedly drained by the militias, with sources in the country indicating that a mere $1.25bn is left in the banks treasury.
The military offensive conducted by the Saudi-led miltary coalition in Yemen is now on its 16th month.
The war has resulted in an estimated 8,000 civilian casualties, nearly 2,800 of whom have lost their lives, as well as 2.4 million displaced people and 21.2 million people in need of humanitarian aid since the military campaign begun.
The campaigns main objective was to restore the legitimate government of President Abd Rabbu Mansour al-Hadi and control the advance of Houthi Shia rebels, believed to be supported by Iran.
The coalition was blacklisted by the UN in June on the ground of violating childrens rights but the ruling was reversed a few days later apparently due to diplomatic pressures exerted by Saudi Arabia.