RIYADH (Reuters) - Yemen's central bank has to move from the capital Sanaa because the armed Houthi movement that controls the city has been pillaging it to finance its war against the exiled government, the bank's newly appointed governor said on Monday.
Exiled president Abd-Rabbu Mansur Hadi appointed Monasser Saleh al-Quaiti as governor on Sunday and ordered the bank to move to the government-held southern city of Aden, escalating a struggle over the finances of the impoverished country as war pushes it toward famine.
"It has become obvious that the Yemeni Central Bank in Sanaa financed the (Houthi) putschists at government expense and therefore has totally lost its neutrality and independence," Quaiti told reporters in the Saudi capital Riyadh.
Salaries paid by the central bank to pro-Houthi soldiers and officials have reduced Yemeni foreign exchange reserves from $5.2 billion in September 2014 to less than $700 million by the end of August, Quaiti said.
The figure is well below a June estimate of $1.3 billion made by the Sanaa-based bank, which denies any misuse of public funds. If Quaiti's estimate is confirmed, economic collapse could engulf Yemen, one of the world's poorest countries, sooner than previously anticipated.
The central bank in Sanaa, which is currently run by veteran governor Mohamed Bin Humam, could not immediately be reached for comment.
Diplomats largely agree that the bank has maintained its impartiality throughout the 18-month civil war, remaining the last pillar of Yemen's financial system and guaranteeing imports of key food staples - a job that becomes harder as foreign exchange reserves dwindle. [nL8N1B54SM]
Yemen imports 90 percent of its food, making the guarantees vital for staving off famine in a country where more than half the population suffers from malnutrition. Of Yemen's 28 million people some 21 million need some form of humanitarian aid.
Quaiti acknowledged concerns about the humanitarian fallout that might result from moving the bank, but said the problems pre-dated the government's decision to intervene.
"The central bank has reached a point at which it has exhausted its foreign reserves and is no longer able to cover its commitments," he said.
It remains unclear whether foreign banks and international financial institutions will cease their dealings with the Sanaa bank, as the exiled government has demanded.
The Houthi movement, an armed Islamist movement hailing from Yemen's Zaydi Shi'ite sect, took over Sanaa in September 2014 and seized most public institutions in what it described as a revolution against corrupt officials.
When their fighters and allies in Yemen's army advanced on Aden in March 2015, Saudi Arabia and a coalition of mostly Gulf Arab states intervened in the conflict on the side of the internationally recognized government.
The warring sides mostly held off interfering with the bank's payment of public sector salaries and support for imports in order to spare people more pain as the conflict wrought economic crisis.
Some 21 million of Yemen's 28 million people need some form of humanitarian aid and more than half the population suffers from malnutrition.
(Reporting By Noah Browning and Katie Paul; Editing by Gareth Jones)