Yemen aims to stop central bank officials tapping state funds abroad

DUBAI — Yemen's government has asked international financial institutions to prevent central bank officials from accessing state funds held in overseas banks, the state-run sabanew.net news agency reported on Saturday.

The move could exacerbate a humanitarian crisis in Yemen, where a civil war has been raging between the Iran-allied Houthis, who control the capital Sanaa and the central bank, and the internationally recognised government of Prime Minister Ahmed Bin Daghr based in the southern port city of Aden.

Bin Daghr has received "confirmed information" that the central bank administration is tapping Yemeni foreign reserves held at banks in Europe and the United States after exhausting funds in Sanaa and elsewhere for the war effort, an official at the prime minister's office told the news agency.

"Out of concern for the funds and belongings of the Yemeni people, and in order to preserve the remaining public funds... the Yemeni government has decided to take this step, which includes suspending dealing with Central Bank Governor Mohammed Awad Bin Humam," the official was quoted as saying.

The 69-year-old Bin Humam had continued in his post after advancing Houthi fighters forced President Abed Rabbo Mansour Hadi and his government into exile in Saudi Arabia in March last year, precipitating the Saudi-led intervention.

World powers have been concerned about the humanitarian situation in Yemen, where the United Nations says many provinces are on the verge of famine. More than 6,400 have been killed since March last year and some 2.5 million have been displaced.

The Yemeni government move came as UN-sponsored peace negotiations in Kuwait ended without an agreement after nearly three months of talks, paving the way for fresh fighting.

Last month, Bin Humam said a second round of transfers of bank funds abroad to facilitate imports had been scheduled in days. His comments appeared to confirm what an official at a Yemeni government bank told Reuters a week earlier about a first batch of transfers taking place earlier this year.

Hadi's government has accused the Houthis of squandering some $4 billion in reserves held by the central bank on the war effort, but the Houthis say the funds had been used to finance imports of food and medicine.

The reserves have fallen to around $1.1 billion from $4.7 billion at the end of 2014. The IMF put them at well below two months' of imports, which it told Reuters was "very, very low".