Sanaa, Asharq Al-Awsat- Yemeni Central Bank Governor Ahmad Abdal-Rahman al-Samawi has said that the bank’s foreign reserves reached $7.6 billion at the end of 2006, enough to cover the country’s imports for nearly 15 months, compared to $6.1 billion in reserves at the end of 2005, amounting to an increase of nearly $1.5 billion.
Speaking to Asharq al-Awsat, the Central Bank governor said the Yemeni banking sector achieved over last year a series of positive financial and monetary indicators, including the increase in the budget of the Yemeni commercial and Islamic banks from 753 billion Yemeni riyals at the end of 2005 to a trillion riyals at the end of last year, with an increase of 253 billion riyals, which equals 33.5%. He explained that the share for Yemeni banks amounted to nearly 71.5% of the total banking activity last year, thus achieving a growth of 35%, whereas Arab and foreign banks operating in the country achieved 28.5% of the total banking activity with a growth of nearly 30.6%.
He added: “The Yemeni banks were able to raise their revenue by 360 billion riyals last year after their deposits reached 214 billion with a capital of 854 billion at the end of 2006.”
Al-Samawi said: “The growth in the balance of deposits in banks contributed to increasing the amount of loans granted to the various investment and economic sectors by 40 billion riyals, thus raising the amount of loans to 263 billion riyals at the end of last year compared to 224 billion riyals at the end of 2005. He noted that the growth in bank deposits and financing over last year reflects an improvement in the efficiency of the banking system and its ability to attract more deposits and savings and reemploy them in financing development and investment projects, particularly after the Central Bank implemented a series of reforms aimed at strengthening banks’ ability to fill its savings and allocate more resources for economic activities, in addition to developing ways of monitoring the performance of banks.
The Yemeni Central Bank governor pointed out that the economic reforms program which his country has been implementing in cooperation with the International Monetary Fund, World Bank, and other financial establishments since 1995 achieved several positive results represented by controlling the inflation and reducing general foreign debt to safe levels whereby the foreign debt did not exceed $5.4 billion at the end of 2006 compared to $11.4 billion in 1996. He said the monetary and financial policy adopted within the framework of the reforms program achieved additional results, as illustrated by the testimony of several international financial establishments, through its ability to establish a stable financial system that is based on an open market and which successfully brings together three contradictions; namely, an open market, currency flotation, and accruing suitable foreign reserves in hard currency.
In the course of his interview, Al-Samawi spoke about monitoring and preventative measures which the Central Bank and other Yemeni banks are adopting with regard to money laundering and financing terrorism. He explained that Yemen is not conducive to money laundering due to the limited capital of Yemeni banks.