Central Bank of Yemen downplays Watani bankruptcy [Archives:2006/909/Business & Economy]
The Central Bank of Yemen recently stated it is making every effort to collect Watani Bank debts and will pursue bank law in determining its status. CBY also mentioned it is assessing assets and obligations of Watani Bank for Trade and Investment for auditing by an international committee.
CBY's statement noted its efforts to raise Watani Bank to the level attained by other Yemeni banks that abided by CBY instructions and became highly efficient in performance, stating that the main reason Watani Bank reached its present level was its administration's lack of commitment to laws, instructions and monitoring criteria CBY set forth, as well as pledges with CBY signed by Watani Bank's board of directors.
The statement said, “The failure of a bank in the Yemeni banking sector, whose share in the banking market is very small, does not indicate a structural problem in a banking sector characterized by soundness, efficiency and ability to meet its domestic and foreign obligations.”
CBY considers the Watani Bank case exceptional, affirming that banks covering the greater share of banking sector activity are in a safe and secure position and capable of meeting their obligations.
The statement reviewed CBY efforts in recent years to lead Yemen's banking sector to a safe and stable situation whereby banks can meet their obligations. It noted CBY successes achieved in this regard and positive developments in the banking sector in the past 10 years, since economic and monetary reform began, by comparing the sector's gross capital and reserves at the beginning of the reform program, which amounted to only YR 3 billion and now are more than YR 40 billion.
The statement also mentioned that proportion of capital adequacy at the end of 1997 was less than 1 percent, whereas according to international criterion, this percentage must not be less that 8 percent. As a result of CBY efforts, its application of international criteria and a gradual increase in bank capital, the banking sector's proportion at the end of 2004 was approximately 12 percent, reflecting significant development.
Ministry plans international conference to promote investment in Yemen
The Ministry of Planning and International Cooperation recently began intensive preparations for a June international conference promoting investment opportunities in Yemen.
Ministry undersecretary Hisham Sharaf Abdullah said in a press conference that a technical committee from the ministry and general secretariat of the GCC soon will meet in Riyadh, Saudi Arabia, to discuss conference arrangements and make preliminary plans. He added that the conference will convene in one of the GCC states, with the world's large companies, trading and investment firms invited to attend. Abdullah indicated the ministry also began contacting the World Bank and Sana'a representatives of donor countries and organizations to discuss conference arrangements and how to ensure its success.
He added that the conference will feature all investment opportunities in various economic sectors, comprehensive preparation to present and promote those opportunities and work to create a strong push in attracting Arab and foreign capital to Yemen.
A Central Bank of Yemen report recently revealed the country's debt to Saudi Arabia amounted to $272.5 million at the end of October 2005, compared to $269.2 at the end of the previous month, an increase of $3.3 million. According to the CBY report, Yemen's debt to Saudi Arabia is considered the highest among non-member countries of Paris Club and Yemen's debt to the Kuwaiti Fund comes in at second place, amounting to $179.2 million. The report also revealed that Yemen's total debt by the end of October 2005 to countries not members of Paris Club rose to $1.18 billion.