Yemen poverty rate rises amid ongoing war

Yemen's ongoing war is devastating its economy, with 85% of the population now living in poverty, according to a September 11th report issued by the Studies and Economic Media Centre.

Economic and humanitarian conditions deteriorated in the first half of 2017 amid the war, which precipitated a lack of basic services such as electricity and water and a shortage of food, the report said.

Factors contributing to the rise in the poverty rate include a rise in the price of food and oil derivatives, which include gasoline, diesel and domestic gas, as well as a rise in the currency exchange rate.

The volume of food imports declined 22% in the first quarter of 2017, and oil imports during the same period increased by 103%, compared to the first quarter of last year.

According to the report, food prices rose 35% compared to the first half of last year, and by an average of 60% compared to the pre-January 2015 period.

The price of oil derivatives rose by 19% in the first half of 2017, compared to the first half of 2016, and by 158% compared to the pre-January 2015 period.

The report noted that foreign exchange rates witnessed a significant increase against the Yemeni riyal in the first half of this year, as the exchange rate for the dollar rose by an average of 29%, compared to the same period last year.

Millions in need of support

"The humanitarian situation in Yemen is dire, especially with regard to food security," said Deputy Minister of Planning and International Co-operation Mohammed al-Masouri.

He told Al-Mashareq that "18 million Yemenis are now in need of support and humanitarian aid, and this number will continue to rise steadily as the war continues, as international organisations have warned".

Al-Masouri attributed the increase in poverty to the deteriorating humanitarian situation brought on by the war, which has impacted all aspects of life.

The liquidity crisis is one of the toughest economic challenges, as banks cannot meet their obligations to their customers, Studies and Economic Media Centre chairman Mustafa Nasr told Al-Mashareq.

As a result, he said, merchants have turned to currency exchange companies and the black market instead of banks to buy the currencies they need.

"The high food and oil derivative prices, poor services provided by state institutions and by the health sector, half of whose facilities are out of service, are compounding the humanitarian crisis," he added.

The non-disbursement of public employee salaries for the past 11 months has been one of the economic constraints in Yemen, particularly in areas controlled by the Houthis (Ansarallah), he added.

Other constraints include the difficulty of transporting goods and commodities in Yemen, whether via sea, land or air, and the volatility of state revenue.

Suspension of oil exports, government services

"The suspension of the country's oil and gas exports due to the war circumstances has had a negative impact on the disbursement of employee salaries," economist Abdul Jalil Hassan told Al-Mashareq.

It also has impeded the implementation of the state’s investment programme, as a consequence of which many private sector enterprises have closed, he said, causing thousands to lose their jobs and contributing to the rise in poverty.

The suspension of disbursement of social security assistance also contributes to rising poverty, "as that cash assistance was being disbursed to 1.5 million families, to whom it was the only source of cash", Hassan said.

This has exacerbated the suffering of the Yemeni population, which already has been adversely affected by the rise in prices in general and the suspension of government services, he said.