Foreign currency reserves at the Central Bank of Yemen fell to a five-year low in the first quarter of 2010, leaving the ability of one of the Arab world’s poorest country to cover imports at a record low despite a jump in revenues from oil exports.
The bank’s total foreign asset holdings fell to $6.2bn in March, fractionally higher than the $6.1bn average seen in 2005, but significantly lower than the $7.5bn seen in 2006, a report issued on 4 May shows.
The fall in reserves means that the bank can now only cover seven months of imports at current levels, a record low as the country’s dependency on foreign goods has increased and the dollar has lost value since 2005. On average, the bank was in a position to cover 7.3 months of imports through its foreign currency reserves in 2009.
The government exported a total of 8.6 million barrels of crude oil during the first quarter of 2010, the central bank report shows, earning $665.3m in the process. Domestic consumption totalled 5.4 million barrels during the first three months of the year.
The government only exported 5.9 million barrels of oil during the first quarter of 2009, earning a total of $254.8m, less than half its income in 2009.
However, Sanaa exported 10.4 million barrels of oil in the first quarter of 2008, earning a record $998m for the first three months of the year as oil prices also approached record highs.
The country faces increasing cash problems as oil revenues, which made up around 76 per cent of government income in 2009, fail to balance out expenditure. The country’s spending deficit topped 10 per cent in 2009, according to the Washington-headquartered World Bank.
According to International Monetary Fund (IMF), also Washington-headquartered, Yemeni government debt hit 45.9 per cent of the country’s $26.6bn gross domestic product (GDP) in the same year.