Development instead of deposits: A new Saudi approach to supporting Yemen's economy
Saudi Arabia’s economic policy toward Yemen is undergoing a significant strategic shift, moving from an exclusive focus on temporary, emergency solutions such as direct financial deposits to a sustainable development approach aimed at addressing the root causes of the economic crisis. This shift reflects a new vision focused on creating a robust infrastructure that will ensure the long-term recovery of the Yemeni economy, rather than relying on temporary fixes.
From emergency relief to sustainable development
For many years, Saudi support for Yemen has relied primarily on injecting financial deposits into the Yemeni Central Bank to support the local currency and prevent the collapse of the riyal. While these deposits were crucial in averting impending economic disasters and providing the necessary liquidity for importing basic foodstuffs, experience has shown that their impact remains limited to a specific timeframe, quickly fading as foreign currency reserves continue to be depleted and real production remains absent.
Today, through the Saudi Program for the Development and Reconstruction of Yemen, the Kingdom of Saudi Arabia is adopting a strategy focused on implementing vital projects on the ground. These projects encompass the health, education, energy, transportation, and water sectors, in addition to supporting the agricultural and fisheries sectors. The goal is not only to provide services but also to create job opportunities for Yemenis and stimulate the local economy from within.
The importance of transformation and its impact on the Yemeni reality
The importance of this new approach lies in its potential to achieve economic and social stability. Instead of using deposits to cover operating expenses or temporarily support the exchange rate, the funds are invested in building schools, paving roads, upgrading airports and seaports, and establishing power and water plants. This infrastructure is the foundation upon which Yemen can recover and attract future investments.
Regional context and vision for the future
This approach aligns with the regional vision that recognizes Yemen's stability as integral to the stability of the region. Relying solely on financial aid without building a productive economy perpetuates Yemen's cycle of dependency. Therefore, shifting towards development projects represents a fundamental solution aimed at empowering and enhancing the efficiency of Yemeni institutions, thus paving the way for the comprehensive recovery and reconstruction that the Yemeni people await.
