estimated at billions of dollars, war causes huge economic losses

By: Mona Zaid

More than Five years of war have devastated Yemen, left 19 million people in need of some kind of humanitarian assistance and created the largest food security emergency in the world.

Yemen usually imports more than 90% of staple food. But a naval embargo imposed by the Saudi-led coalition, fighting around the Hadi government-controlled port of Aden and air strikes on the port of Hudaydah, have severely reduced imports since 2015.

A lack of fuel, coupled with insecurity and damage to markets and roads, have also prevented supplies from being distributed.

The World Food programmer’s executive director, Ertharin Cousin, warned in March 2017 that aid workers faced a “race against time” to prevent a famine.

Basic commodity prices are on average 30 to 50% higher than before the war, while purchasing power has been substantially reduced because of dwindling livelihoods.

The World Bank estimates that the poverty rate has doubled to 62%, with public sector salaries – on which about 30% of the population depend – paid only irregularly.

With the UN elevation of the Yemen crisis to a level 3 emergency in  and IPC levels of food insecurity reaching ‘emergency’ in more than half of the country’s provinces, this was a remarkable move to take—even if the intention was to consolidate food access through the small port of Aden—as the largest impact of such destabilization would unequivocally be felt by the populated northern.

Several factors determine the deepening of hunger in Yemen: vastly reduced food and fuel imports, the non-payment of public sector wages and the failure of the Aden bank to implement monetary policy to prevent a liquidity and devaluation crisis. Since the move, the black market and official rate for the Yemeni riyal continue to deviate, depleting household resources, worsening the ability to cope with food and fuel shortages and commensurate price shocks.

The cost from damage to infrastructure and economic losses in Yemen’s war is more than $14 billion so far, according to a confidential report seen by Reuters that highlights the effort needed to rebuild the country, where more than half the population is suffering from malnutrition.

“The conflict has so far resulted in damage costs (still partial and incomplete) of almost $7 billion and economic losses (in nominal terms) of over $7.3 billion in relation to production and service delivery,” said the May 6 joint report by the World Bank, United Nations, Islamic Development Bank and European Union.

The Preliminary Damage and Needs Assessment report is an internal working document that is not being publicly released.

“These preliminary findings are not only partial, but also evolving” because the conflict is ongoing, the report said. The assessment, it said, was conducted between late 2015 and early this year.

Showed that of 1,671 schools in 20 governorates which suffered damage, 287 need major reconstruction, 544 were serving as shelters for internally displaced persons, and 33 were occupied by armed groups. Based on a sample of 143 schools, the estimated cost of the damage was $269 million.

Citing the Ministry of Public Health and Population, the report said 900 of 3,652 facilities providing vaccination services were not operating in early 2016, leaving 2.6 million children under 15 at risk of contracting measles.

In Taiz, Yemen’s third-largest city, the public health system has nearly collapsed, with half the public hospitals damaged or inaccessible.

“There has been a surge in civilian morbidity and mortality as an indirect consequence of the conflict,” the report said.

The restrictions on imports of fuel – essential for maintaining the water supply – combined with damage to pumps and sewage treatment facilities, also mean that 14.4 million people now lack access to safe drinking water or sanitation, including 8.2 million who are in acute need.

The war shut down oil production, and the fighting, demonstrations, electrical outages, and fuel shortages have paralyzed local businesses to the extent that banks and money exchangers are refusing to buy Yemeni Riyal.

The risk of economic insolvency remains high. Indicators of such an outcome are the following: the Central Bank of Yemen has hemorrhaged through its reserves 17, import and tax revenue have been crippled by conflict, the Yemeni riyal continues to fall against the dollar and the official rate, and the cost of basic goods has increased due to limits on imports and public sector wages depended on by more than one million Yemenis have remained unpaid . With few resources, little trade access and a bloated public sector.

READ: https://www.dailyyemen.net/2020/04/16/yemeni-telecommunications-sector-lose-1-4-billion/

In his part, Minister of Oil and Minerals in Sana’a government, Ahmed Abdullah Dares has said that the losses of oil and minerals sector due to the war are very huge, estimated at billions of dollars, as a result of the suspension of many giant projects in this important economic .

The Minister of Oil pointed out that the Saudi-led coalition was not enough with these losses and the siege imposed on the Yemeni people. The Saudi coalition resorted to detaining oil derivatives ships and preventing their entry to the port of Hodeidah in an effort to humiliate the Yemeni people.

Dares indicated that the acts of maritime piracy and the seizure of derivative ships grow out of large financial penalties that are borne by the Yemeni people, which are added to the prices of oil derivatives.

The Minister Dares pointed out that these “demurrage” fines prevented citizens from benefiting from the reductions of fuel prices that the world witnessed in light of the precautionary measures taken by the countries of the world to confront the Corona epidemic, indicating that the fines are due to the detention of oil ships and its delay exceeded 101 million dollars during the year 2019 and the last period of this year.

He pointed out that the ministry is currently completing its procedures to file lawsuits against the Saudi-led coalition countries so as to obligate them to pay fines for delaying oil ships, especially since all of these ships have been obtained entry permits by the United Nations.