Foreign currency reserves at central bank remain perilously low
Yemen more than doubled its earnings from oil exports in the first five months of 2010, as it boosted its share of output and an increase in the price of crude buoyed revenues.
Sanaa exported a total of 14.46 million barrels of oil in the five months to May 2010, selling it at an average of $78.28 a barrel and earning a total of $1.1bn, the Central Bank of Yemen said in an 11 August report.
This compares with the $483.24m the government raised in the first five months of 2009, selling 10.16 million barrels of crude at an average price of $47.56 a barrel.
The report shows that the increase in exports came as domestic consumption was cut significantly, falling 2.94 million barrels to 8.65 million barrels in 2010 from 11.59 million barrels during the same period of 2009. No reason was given for the extra 1.4 million barrels the government had available for export during the period.
Meanwhile, despite the increased revenues from oil and gas, foreign currency reserves at the central bank continued to fall as it moved to defend the value of the riyal.
The bank’s net foreign assets stood at $5.72bn in May, the lowest since they fell to $5.7bn in 2005. As a result, the government’s ability to cover imports stood at 7.9 months, a record low.
The central bank has been trying to prevent fresh falls in value of the Yemeni currency, the riyal, against the US dollar since the beginning of 2010. It fell to a record low in early August, with YR255 buying $1.
The country is hugely dependent on imports, and the government has spent nearly $1bn since the beginning of the year on buying local currency to prop up its value. The riyal was trading at YR237.3 against the dollar on 15 August.
Earlier in August, the Washington-headquartered International Monetary Fund (IMF) approved a $368m loan to Yemen to help the government work on its current three-year development plan and to help maintain fiscal stability in one of the the Arab world’s poorest countries.
The fund is also advising Yemen on the issue of a YR50-60bn sukuk, or Islamic bond.