Mokha Economic Brief – August 2026
Introduction
Yemen’s economy remained under significant pressure throughout August 2026, reflecting the continuing effects of the war that followed the Houthi group’s takeover in September 2014. Productive sectors continued to deteriorate, public revenues remained weak, and institutional and financial divisions persisted.
At the same time, the internationally recognized government took steps to reorganize the financial sector, develop payment systems, and tighten oversight of the foreign exchange market. Monetary conditions continued to differ sharply between Houthi-controlled areas and areas under government control. While the exchange rate in Aden remained relatively stable during the month, the monetary divide across the country persisted.
The effects of the war also continued to weigh on economic facilities and infrastructure. The repercussions of the attack on Mokha Port, together with continued delays in restarting the Aden Refinery, highlighted the fragility of the economy and its limited capacity for recovery.
Central Bank Launches the Yemen Payments and Clearing Company to Advance Digital Transformation
The Central Bank of Yemen in Aden convened the founding general assembly of the Yemen Payments and Clearing Company, marking a step toward reorganizing and developing the national infrastructure for payment and financial settlement systems and strengthening connectivity among banking institutions. The initiative is intended to support the transition toward digital financial services and broaden financial inclusion.
The company will provide an institutional framework for developing payment and settlement services, improving the efficiency of financial transactions, and reducing reliance on traditional procedures for payments between banks and financial institutions.
The initiative comes at a time when Yemen’s banking sector faces accumulated challenges caused by the war, institutional fragmentation, and declining confidence in the financial system. Developing payment infrastructure therefore represents more than a technical transition.
The impact of the initiative, however, will depend on the Central Bank’s ability to complete the necessary legislative and technical framework, expand the participation of banks and financial institutions, and ensure the security and continuity of the systems. These steps will determine whether the project develops from an institutional framework into an operational infrastructure capable of supporting the modernization of Yemen’s financial sector.
Delays in Restarting the Aden Refinery Keep One of Yemen’s Major Oil Assets Out of Production
A report published by Al Jazeera Net revealed that the Aden Refinery has been unable to resume crude oil refining despite more than ten years having passed since operations were halted.
According to Saeed Mohammed Thabet, the company’s executive director, restarting the refinery would require rehabilitating its power station at an estimated cost of $20–25 million, in addition to securing a regular supply of crude oil and sufficient working capital to finance operations.
The refinery’s current activities are limited to storage and asphalt production. Its continued inactivity means that one of Yemen’s most important oil-related industrial assets remains outside productive operation at a time when the domestic market relies heavily on imported petroleum products to meet demand.
The prolonged delay also deprives the economy of the added value that could be generated through domestic crude refining and limits the government’s ability to use the refinery both as a source of revenue and as part of the country’s domestic fuel supply infrastructure.
The requirements for restarting the refinery show that the challenge is no longer simply the facility’s prolonged shutdown. A return to production depends on securing financing, electricity, crude supplies, and operating liquidity at the same time, which helps explain why efforts to bring the refinery back into operation have continued to stall.
Houthi Attacks Paralyze Mokha Port, Causing $16 Million in Direct Losses
A series of missile attacks launched by the Houthi group against Mokha Port in recent days disrupted trade and supply flows through the facility and brought its commercial and maritime activity to a complete halt. More than 25 missiles struck the port’s berths, facilities, equipment, and vessels in the surrounding area.
Abdulmalik Al-Sharabi, Director General of Mokha Port, said that seven people were killed and others injured in the attacks. Direct material losses were estimated at around $16 million, including damage to six wooden vessels, a dredger being used in the port expansion project, as well as several facilities, pieces of equipment, and elements of the port’s operational infrastructure.
The shutdown has also cut off the income of around 1,300 workers who depend directly on the port’s commercial and maritime activity. It has further disrupted an expansion project intended to increase the port’s operational capacity.
The economic consequences of the attacks extend beyond the value of the immediate physical damage. The port’s closure means lost revenues from fees, services, and related commercial activity, while also disrupting the movement of goods and supplies through one of the main maritime gateways on Yemen’s western coast. This could increase transport costs and place additional pressure on local supply chains.
If the disruption continues, the port and the economic sectors and services connected to it will face mounting losses that will grow the longer commercial and maritime activity remains suspended.
Central Bank Tightens Oversight of Exchange Sector and Suspends Three Licenses
The Central Bank of Yemen in Aden suspended the licenses of three entities operating in the money exchange sector and ordered the closure of their premises after regulatory inspections identified violations.
The measures were issued under Resolution No. 14 of 2026, dated August 19, as part of broader efforts to strengthen compliance with laws and regulations governing money exchange and transfer activities and to tighten oversight of businesses operating in the market.
The decision reflects the Central Bank’s continuing effort to strengthen supervision of the foreign exchange market, which plays a central role in liquidity flows and money transfers within Yemen’s economy. Such measures are particularly important given the sensitivity of the exchange market and the effect that unregulated practices can have on the stability of financial transactions.
Suspending licenses and closing premises increases the cost of non-compliance for exchange businesses and can help strengthen discipline across the sector. The effectiveness of these measures, however, will depend on sustained and consistent field inspections, as well as efforts to curb the activities of unlicensed operators that may provide alternative channels outside formal regulatory oversight.
Exchange Rate Remains Relatively Stable in Aden amid Persistent Economic Fragility
Market data for August showed the US dollar trading in Aden within a range of YER 1,550–1,570, while in Sana’a it stood at approximately YER 531 for buying and YER 533 for selling at the end of the month, reflecting the continued monetary divide between areas under different authorities.
This divergence persists at a time when Yemen remains heavily dependent on imports for basic goods, leaving the economy highly exposed to fluctuations in global food and energy prices, as well as international transport and shipping costs.
The relative stability of the exchange rate in Aden does not indicate a fundamental improvement in economic performance. The main factors supporting the value of the currency remain weak, including limited domestic production, declining government revenues, weak economic activity, and limited employment opportunities.
Yemen’s dependence on imports also means that increases in international prices or shipping costs are transmitted quickly to the domestic market. Maintaining a relatively stable exchange rate may therefore help contain additional price pressures, but it does not address the underlying causes of the crisis unless accompanied by improvements in production, public revenues, and broader economic activity.
Houthi Authorities Raise Customs Duties and Sales Tax on Imported Cement
During August, the Houthi authorities increased customs duties and sales tax on imported cement in areas under their control through two consecutive hikes, as part of measures related to import regulation and revenue collection.
The decision comes at a time when the local market, particularly the construction sector, relies on imported cement to meet part of its demand. Any increase in duties therefore feeds directly into import costs and final market prices.
These measures raise the cost of construction inputs for contractors, developers, and consumers alike, and may contribute to higher prices for building materials and increased construction costs in Houthi-controlled areas. Higher charges on a basic commodity closely tied to construction and reconstruction activity could also weaken demand for new projects at a time when economic activity is already constrained by weak purchasing power and high operating and transport costs.
Conclusion
Developments in August show that Yemen’s economy continues to operate under exceptional conditions shaped by war and division, with efforts to address economic imbalances closely tied to political and security developments.
Persistent differences in exchange rates and financial policies between Houthi-controlled areas and areas under the authority of the internationally recognized government, together with reduced activity at a number of vital facilities, continue to limit the economy’s ability to return to a normal cycle of activity.
At the same time, measures taken by the Central Bank in Aden point to efforts to strengthen financial management and tighten market oversight. Their impact, however, will remain limited without a more stable economic and institutional environment.
Continued pressure on productive and commercial sectors also highlights the need to move beyond managing recurring crises toward policies aimed at restoring production, encouraging investment, and strengthening public revenues.
Taken together, the indicators for August suggest that Yemen’s economic challenge is no longer about addressing a single imbalance. It involves a broader set of accumulated structural problems affecting the currency, institutions, revenues, production, and trade.
Any sustained economic recovery will therefore remain closely linked to restoring functioning institutions, reunifying the domestic market, and creating the conditions needed for economic and productive activity to resume on a sustainable basis.
