Currency rout has Yemen facing starvation
Economy shrank 28% in 2015 and was to contract further in 2016, according to World Bank data
Anwar Abdullah goes to work every day but he hasn’t been paid in five months. When prices for wheat, sugar and other staple foods spiked earlier this month, the Yemeni school teacher feared for his three children.
The civil war that flared into a regional conflict has devastated Yemen’s economy and pushed millions to the brink of starvation. The local currency’s depreciation and the bombing of ports and roads have disrupted the distribution of food imports on which the poorest Arab country depends. Two of every three of the nation’s 27 million citizens struggle to get enough food to survive, according to the United Nations.
“The situation is deteriorating rapidly because of the conflict,” Reem Nada, a spokeswoman for the UN’s World Food Programme, said by phone from Cairo. “The current level of hunger in Yemen is unprecedented.”
Wholesale prices
Wholesale prices for wheat in Taiz, a city besieged by Iranbacked Al Houthi militants, surged by more than 40 per cent on February 12, when the blackmarket value of Yemen’s currency, the riyal, plunged 30 per cent against the US dollar. The latest price spike suggests that food imports, which provide for 90 per cent of the country’s needs, could become even harder for people to afford. “What can we do? We have nothing,” Abdullah, 38 years old, said on February 14 from the capital Sana’a. “With the new price hikes, we will go begging in the streets.”
Yemen was already unstable before the outbreak of civil war in March 2015 plunged it into chaos, allowing Al Qaida to thrive. The economy shrank by 28 per cent in 2015, as Yemen’s already modest output of oil tumbled, and was set to contract further in 2016, according to the latest available data from the World Bank.
“We are looking at a serious risk of starvation for a large proportion of the population,” Sherin Varkey, Unicef’s acting representative for Yemen, said by phone from Sana’a.
The riyal slumped to 390 to the dollar on the black market on February 12, after trading at about 300 for several months, currency changers in Sana’a, Aden and the city of Taiz said by phone.
As a result, a 50-kg sack of wheat, which many Yemenis buy to make bread, jumped 42 per cent that day to 8,500 riyals (Dh125), while the price for the same amount of sugar rose 27 per cent, according to Ahmad Al Sharabi, a food wholesaler in Taiz. “The riyal is very much overvalued and the government isn’t in a position to defend it,” Peter Salisbury, a senior research fellow at Chatham House, said by phone from London.