Yemen's government doubles customs exchange rate to boost finances

ADEN, July 26 (Reuters) - Yemen's recognised government has doubled the U.S. dollar exchange rate used to calculate customs duties on non-essential goods in areas under its control effective Monday, a senior government official said, in a bid to shore up public finances.

The government based in the south controls the second largest port of Aden, while the country's main entry point for commodities - Hodeidah port - is held by the Houthi movement that also controls most of the north.

Yemen, where more than six years of war and ensuing economic collapse have left 80% of the population reliant on aid, imports the bulk of its goods.

The hike in duties to 500 Yemeni riyals to the dollar from 250 does not apply to basic commodities such as flour, sugar, cooking oil and fuel, said the official, who declined to be named as he is unauthorised to speak to the media.

Wheat, rice, milk and medicine are exempt from duties in a country grappling with what the United Nations says is the world's largest humanitarian crisis with millions facing famine.

The government, which was ousted by the Iran-aligned Houthis from the capital Sanaa in late 2014, has struggled to finance public sector salaries and infrastructure due to depleted foreign exchange reserves.

The amended rate for customs is still far from the current exchange rate of 980 riyals to the dollar in Aden, the government's interim seat where protests have broken out over non-payment of wages.

The warring sides have rival central banks. The government has resorted to money-printing to finance the deficit but in Houthi-held areas, where new notes are banned, the rate is around 600 riyals to the dollar.

A Saudi Arabian-led coalition that intervened in Yemen against the Houthis in 2015 has imposed sea and air restrictions on areas held by the group, hampering the flow of food and fuel.
Reporting by Mohamed Ghobari Writing by Lisa Barrington; Editing by Richard Chang

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