Supporting Trade Finance in Yemen Amid Uncertainty

The war has fragmented Yemen’s once unified, bank-led trade finance system into competing and politicized structures, driven by the suspension of oil and gas exports, severe foreign currency shortages, and the division of economic institutions. The collapse of formal banking, liquidity shortages, and eroded trust have accelerated reliance on less-regulated transfer networks, while regulatory fragmentation has heightened exposure to global de-risking and AML/CFT risks, restricted correspondent banking access, increased import costs, and deepened food insecurity in a country that imports up to 90 percent of its basic staples. Recent reforms by the internationally recognized government and CBY-Aden have helped stabilize the rial and establish a new trade finance framework, but success depends on empowering CBY-Aden to secure sustainable hard-currency inflows, finance essential imports, and enable nationwide banking services. This requires long-term economic reforms, sustained donor support—particularly from Saudi Arabia—to rebuild foreign reserves, coordination with international financial institutions and US authorities to strengthen AML/CFT compliance, an end to Houthi punitive measures against banks and traders, and international pressure to prevent the weaponization of trade finance while protecting humanitarian and remittance flows.