SANAA, May 6 (Xinhua) -- A liquidity crisis that emerged weeks ago in areas controlled by Yemen's internationally recognized government is now compounding the hardships of a population already scarred by war.

Ali Taha, a private-sector worker in Marib province, said the cash crunch has taken a heavy toll on livelihoods, forcing some companies to delay or even suspend salary payments. He warned that a prolonged crisis could lead to job losses.

Economic expert Wafiq Saleh attributed the crisis to disrupted monetary circulation and weak effectiveness of monetary policies.

Saleh explained that price uncertainty has led individuals and financial networks to hoard money outside the banking system, slowing cash circulation and widening a gap between money supply and market needs.

He added that Yemen's reliance on foreign aid and remittances has made the economy highly vulnerable to shocks, draining liquidity from formal banks into parallel markets.

The Mokha Center for Strategic Studies, a non-governmental think tank, noted multiple overlapping factors, particularly a real liquidity shortage reflected in rising nominal demand for cash.

From 2017 to 2025, nominal GDP in rials surged from about 9.9 trillion to over 36 trillion, while currency in circulation outside banks grew only modestly from about 1.53 trillion to only 3.27 trillion, according to the center.

It noted that the imbalance has intensified between 2022 and 2025, with cash circulation growing by no more than 4 percent, compared to a 37 percent rise in nominal GDP.

To quell the crisis, the government has taken several steps. Mohammed Al-Jamaei, a government advisor, told Xinhua that the government has used several monetary tools, including raising interest rates, obliging some banks to provide foreign currency, injecting Saudi riyals into the market for salary payments over the past two months, and refusing to print new money, in a bid to revive monetary circulation.

However, these measures have yet to deliver immediate results. Analysts say that the government must take further measures to truly resolve the crisis.

Al-Jamaei called for stronger cooperation with the central bank, activation of banking security mechanisms, and coordination with security agencies to address imbalances.

For its part, the Mokha Center for Strategic Studies emphasized the need for comprehensive policies to revive monetary circulation, enhance banking efficiency, restore confidence, tighten oversight of parallel markets, ensure regular revenue and salary payments, and accelerate the development of a unified national digital payments system. ■