Yemen's major wheat importers have said they are now unable to import wheat because letters of credit (L/Cs) can no longer be obtained amid a crisis at the Central Bank of Yemen (CBY), documents seen by news agency Reuters show.

Bread forms a major part of people's diet in Yemen and the country is edging towards famine after nearly two years of war between a Saudi-led Arab coalition and the Iran-allied Houthi movement.

Famine looming

According to the UN World Food Programme, the conflict has left an estimated 14.4 million Yemenis 'food insecure', of whom 7.6 million are severely so.

Fahem Group said in a letter seen by Reuters that it wanted to continue importing wheat but was unable to do so because it could not open L/Cs.

A separate letter seen by the news agency addressed to the Houthi-run authorities in Sanaa from major importer Hayel Saeed Group and other large traders said those firms had stopped new wheat shipments.

CBY support

In the absence of conventional trade finance, the CBY had stepped in and was until recently effectively running the economy, according to central bank officials, foreign diplomats and Yemeni political sources on both sides of the civil war.

The bank was able to tap into reserves to keep the economy going, but these had fallen from US$4.7 billion at the end of 2014 to around US$1.1 billion in June 2016, when the International Monetary Fund warned that Yemen could finance just two months' of imports. (DC World News, 15 June 2016).

The bank appears to have managed to provide support for an additional few months but a source at the CBY in Sanaa has now told Reuters that the bank has no access to foreign reserves at all.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.