Yemen cbank exceeds govt loans cap by $1.6bn
Dubai, June 10, 2013
Yemen's central bank exceeded the legal limit on how much it may lend to the government by 347.9 billion rials ($1.6 billion) last year, its annual financial statement showed.
The disclosure underlines the severe financial pressures faced by Yemen as it struggles to rebuild its economy after years of war and political unrest.
The central bank did not reply to a Reuters request for comment, and its officials were not available for comment. It was not clear whether the central bank would be penalised for exceeding its limit or whether it would change its lending policy this year.
Under the law governing the central bank, it may provide temporary emergency financing to the government in exceptional circumstances if that is consistent with its monetary policy.
Such loans may be granted if the total outstanding amount does not exceed 25 percent of the budget's average ordinary revenue in the three previous financial years, the law says. Maturities of loans should not exceed six months.
However, the central bank's total financing to the government, including loans to state companies, stood at 937.9 billion rials in 2012, above the authorised limit of approximately 590 billion, auditors Deloitte & Touche (M.E.) with Dr. Hajar said.
"In addition, the maturities of such loans and advances have exceeded six months, being extended from time to time," the auditors said in the central bank's financial statement for 2012, posted on its website.
Its board of directors discussed and approved the statement on May 7, the website said.
The government's finances have struggled since protests against former president Ali Abdullah Saleh brought the economy to the brink of collapse in 2011, with attacks on oil pipelines squeezing vital budget revenues.
The International Monetary Fund expects Yemen's budget deficit to widen to 5.8 percent of gross domestic product, or about $2.3 billion, from 5.5 percent in 2012.
Last year wealthy Gulf Arab states, Western governments and other donors pledged $7.9 billion in aid over several years to Yemen, the second-poorest Arab state after Mauritania, but only a small fraction of the money has so far arrived.
Saudi Arabia boosted the central bank's reserves with a 12-year, $1 billion loan last September. The repayment is to start after four years.
The central bank's outstanding emergency loans to the central government amounted to 679.0 billion rials last year, down from 691.6 billion in 2011, the auditors said. Emergency loans and advances to state corporations stood at 258.9 billion rials in 2012, up from 156.5 billion.
"We noted that all loans provided to the Public Sector Corporations...were denominated and made payable in United States dollars," the auditors said.
The central bank law stipulates that emergency loans granted to the government and actually utilised shall be denominated and payable only in rials.
The loans to state-owned firms included $36.6 million to Yemen Economic Corp and a $385 million facility to the country's Aden refinery for diesel imports. Both originated in 2008 and have been extended since then, the report said.
Other facilities include $800 million to Yemen Petroleum Co for imports of unleaded gasoline, expanded from $200 million since 2011, and credit to Yemen Gas Co, which has been raised and extended since 2009 to total $121 million. – Reuters