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Abu Dhabi, UAETuesday 25 September 2018

Yemen government announces pay rise after mass protest

For more than a year, the administration has been unable to pay salaries

Yemenis protest the falling value of the Riyal in Aden, Yemen September 2, 2018. Reuters
Yemenis protest the falling value of the Riyal in Aden, Yemen September 2, 2018. Reuters

Yemen's government has agreed to raise the salaries of thousands of public-sector employees, including pensioners, after hundreds of people protested in Aden against the rising cost of living as the Yemeni currency plummets against the dollar.

On Sunday, a cabinet meeting in Riyadh chaired by President Abdrabu Mansur Hadi approved "an increase in civil sector salaries, including retirees and contractors", Yemen's state news agency Saba reported.

But it was not clear when the raise would take effect.

The decision came hours after hundreds of people took to the streets of Aden, the southern province that now serves as the government's de facto capital, burning tyres and blocking roads to demand government action.

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Protest organisers have threatened further civil disobedience until the government takes measures to help millions of Yemenis struggling to survive.

The rial has lost more than two-thirds of its value against the dollar since 2015.

The economic downturn has left Yemenis unable to afford food staples and bottled water.

In January, Saudi Arabia announced a $2 billion (Dh7.34bn) bailout to help bolster the central bank. The rial rose briefly that month but has since plummeted by 36 per cent.

The central bank last month pegged the dollar at an official rate of 379 rials, but the greenback has been changing hands on the black market at much higher values against the local currency.

It was at 600-610 on Monday, according to traders at the Al Amri exchange center in Aden.

Last month the central bank approved withdrawal of the first batch of Saudi funds – but that was only $20.4-million, according to a bank announcement reported by Saba news agency.

A second request for funds from the Saudi deposit and the finalising of measures on how to approve payments and agree on the issuing of certificates of deposits to commercial banks was also approved.

Yet the currency slide has not eased.

Ali Al Kuraimi, an economist and owner of the biggest exchange company in Yemen, told The National that technical procedures taken by the central bank were welcome but a difficult situation in Yemen meant the impact would likely be limited.

A longer deterioration in the economy caused by war, corruption and mismanagement in the Yemeni government is to blame, another economist spoke told The National on condition of anonymity.

"Neither the government nor president Hadi is able to solve the current currency crisis, it is too late for them," he said.

Food costs have jumped markedly in the past three months.

Flour prices have risen by almost a third in the past two months. The price of rice is also up – by more than a quarter – while 20 litres of cooking oil has jumped by a similar amount, from 8,000 rials in July to 10,500 rials on Monday.

The Houthis operate their own central bank from Sanaa, which they have controlled since 2014.

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