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Saudi Arabia said Tuesday it will grant $1.2 billion in financial aid to Yemen’s internationally recognized government in a bid to bolster the country’s struggling economy.
Riyadh said in a statement the cash injection is part of Saudi Arabia’s ongoing efforts to help stabilize Yemeni food prices, address the country’s budget deficit and support salary payments.
Yemen’s civil war, now entering its ninth year, has ravaged the country’s economy, catapulted food prices and pushed half of the population to the brink of famine.
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The conflict in the South Arabian country broke out in 2014 when Iran-backed Houthi rebels seized Yemen’s capital Sanaa, along with much of the north of the country, forcing the internationally recognized government into exile. A Saudi coalition, including the United Arab Emirates, intervened the following year to try to restore the ousted government.
Saudi Arabia has pledged over $1 billion in financial support to the recognized Yemeni government.
Yemen’s central bank has since been divided between the warring sides, with the Houthis operating its monetary authority from Sanaa. For years, the rival Aden branch has driven inflation up by printing new banknotes to finance debts and cover the cost of public sector salaries. Houthi-controlled areas do not accept notes printed by Aden’s central bank.
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In a corresponding statement Tuesday, Yemen’s government said the $1.2 billion aid package would be used to address its budget deficit, support salaries and ensure food security. It remains unclear when the money will be deposited.
Following the announcement, the Yemeni riyal rose slightly from against the dollar, from 1,427 riyals to 1,400 riyals, according to figures from the Aden-based central bank.
The offering is the latest in a series of aid packages Riyadh has granted its Yemeni allies. In February, the Kingdom deposited $1 billion into the Aden-based central bank.
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Over recent months Saudi and Houthi officials have repeatedly met for talks aimed at a negotiated settlement to the conflict. The talks gained momentum earlier this year when Saudi Arabia and Iran, the main foreign backer of the Houthis, reached an agreement to restore diplomatic ties after years of frayed relations.