The World Bank announced in a report that the Houthis’ ban on the circulation of new banknotes in its areas of control has caused serious repercussions to the country’s economy which has been deteriorating due to a drop in oil exports, the downsizing of humanitarian support and devastating torrential rain and flash floods.

In November 2019, the internationally-recognised government of President Abdrabbuh Masur Hadi printed new banknotes to replace the old ones. However, the Houthis have banned their use and exchange in areas under its control.

In its October 2020 report, the World Bank added that distortions created by the fragmentation of institutional capacity (especially of the Central Bank of Yemen) and the divergent policy decisions between the areas of control, have further compounded the economic and humanitarian crises.

According to the report, the economic and social prospects for the Yemeni economy during the remainder of 2020 and beyond remain uncertain. However, a gradual recovery of global oil prices would help ease the strain on public finances of governorates under the internationally-recognised government and reduce the recourse to central bank financing.

“Urgent progress to address the current restrictions of access to supplies and fuel imports through Hodeidah would improve the provision of public services and the operational environment for humanitarian operations,” the World Bank report concluded.