LONDON: When Riyadh announced on Wednesday a new SR 1.3 billion ($346.6 million) package to support Yemen’s government budget, salaries, and operational costs, it underscored more than a financial gesture. It reaffirmed a steady doctrine: diplomacy through economic stabilization.
Saudi Arabia’s military and humanitarian engagement in Yemen has long drawn global attention. Yet its economic role — through direct budgetary support, deposits, and large development projects — has been equally central to shaping the country’s fragile path toward recovery.
The latest aid signals Riyadh’s conviction that fiscal stability underpins enduring political and security progress.
The Kingdom has rolled out numerous economic and humanitarian initiatives in recent years.
Project Masam, a Saudi-funded demining program launched in June 2018 under KSrelief and in partnership with Yemen’s Executive Mine Action Center, has cleared more than 450,000 explosive devices.
In September 2025, KSrelief and the UN migration agency, IOM, launched two $4.45 million projects: one replacing costly water trucking in Ma’rib with permanent water systems and the other rehabilitating education facilities in Aden, Lahj, and Taiz for conflict-affected communities.
This builds on the Saudi Program for Development and Reconstruction of Yemen’s portfolio of hundreds of infrastructure projects spanning education, health, water, energy, transport, agriculture, fisheries, and governance capacity-building, offering a lifeline to millions amid what the UN has often called the world’s worst humanitarian crisis.
Yet this directive, guided by the Saudi leadership and channeled through the SDRPY, comes at a turning point for Yemen’s governance.
Fresh from recent leadership changes, the country faces acute economic strain. Public institutions grapple with severe liquidity shortages and salary arrears that threaten to erode what little trust remains in the state.
The SDRPY package is intended to strengthen economic, financial and monetary stability, enhance government capacity, improve governance and transparency, and empower the private sector to drive sustainable growth.
With a gross domestic product of just $19-20 billion, ranking roughly 125th in the world, the package is designed to kickstart Yemen’s derelict economy and break the vicious cycle whereby collapse fuels aid dependency, rendering the state all but ungovernable.
“There is no doubt that the recent Saudi support to the Yemeni government comes at an important time, following the formation of the new government headed by Dr. Shaea Al‑Zandani and its return to the interim capital Aden to manage affairs from within the country,” Gulf analyst Abdulhadi Al-Habtoor told Arab News.
“As Saudi Defense Minister Prince Khalid bin Salman announced, the support is meant to cover operational expenses and salaries, responding to the urgent needs of the Yemeni government.
“In my view, this assistance will also help the government continue the economic reforms it began in the past period, with a focus on transparency, combating corruption, and unifying state revenues under the Yemeni central bank.”
Yemen’s public payroll — the lifeline of any society — has nearly collapsed. Teachers, soldiers, medical staff, and administrative workers in government-controlled areas have gone months without pay.
Even when salaries do arrive, rampant depreciation of the Yemeni rial has eroded their value, forcing families to borrow money, sell belongings, or skip meals to survive.
Economically, the package targets Yemen’s gravest structural challenge: the inability to pay around half a million civil servants regularly.
Saudi officials said the funds will bolster the salary component of Yemen’s budget, ensure consistent disbursements, and lay the foundations for long-term financial stability.
“Yemen remains Saudi Arabia’s top regional priority,” Salman Al-Ansari, a Saudi geopolitical researcher, told Arab News. “Saudi Arabia is the world’s largest humanitarian and development partner to Yemen, providing more than $20 billion in support over the past decade.
“More than two million Yemenis live and work in the Kingdom, reflecting the deep human ties between our peoples. Paying salaries to our brothers and sisters in Yemen is only one part of a broader Saudi commitment to help Yemenis rebuild their lives and restore stability.”
The implications stretch beyond payroll. By circulating liquidity across Yemen’s regions, the package aims to restore purchasing power, stabilize household incomes, and revive confidence in local markets.
Over time, this could reactivate small businesses, strengthen supply chains, and weaken parallel economies run by militias and informal networks — bringing a semblance of normalcy to a country where despair once seemed all-consuming.
“We should also not forget that this Saudi support came after the recent events in eastern Yemen (Hadramout and Al‑Mahra) and the unrest caused there by the Southern Transitional Council before its dissolution — developments that negatively affected the living conditions of residents,” said Al-Habtoor.
“This latest support is expected to restore normalcy across the liberated provinces, reinforce the unity of the legitimate government’s ranks, and strengthen efforts to confront the Houthi terrorist group, which still controls the Yemeni capital, Sana’a.”
Riyadh’s approach stands out for its continuity.
Since 2012, Saudi Arabia has injected an estimated $12.6 billion in economic assistance to Yemen — through deposits at the central bank, monetary transfers, and direct grants — to avert fiscal collapse and curb the inflationary spiral that has undermined local governance.
The aid aligns with the Kingdom’s core regional narrative: security and development are inseparable.
Saudi Defense Minister Prince Khalid bin Salman recently emphasized that Riyadh’s support “embodies the Kingdom’s commitment to strengthening security and stability and contributing to building a better future for Yemen and its people.”
This logic has shaped much of Saudi Arabia’s current strategy in Yemen: prioritizing gradual economic rehabilitation — through liquidity support and targeted projects — over grand reconstruction pledges.
The Defense Ministry’s statement in January that Saudi Arabia had launched 28 developmental projects worth SR 1.9 billion across key sectors including health, energy, and education solidified this integrated approach: stabilizing essential services while re‑energizing public infrastructure.
In Yemen, such measures carry profound social and political weight. Regular salaries and operational funding signal legitimacy, keeping public employees connected to the state apparatus and preventing the hollowing out of governance.
In a landscape long defined by fractured authority, financial continuity becomes a simple act of state‑building.
Critics, however, note that the scale of need dwarfs the amount of aid. Yemen’s economy — operating at a fraction of pre-conflict capacity amid oil export blockades, inflation spikes, and declining donor support — is projected to have shrunk 1.5 percent in real GDP in 2025 and remains institutionally divided.
Yet, from Riyadh’s perspective, short‑term stabilization must precede structural change, a philosophy that echoes its domestic economic doctrines alike, where fiscal buffers unlock diversification.
The $346 million support, then, functions on two intertwined fronts: a humanitarian lifeline for millions facing wage insecurity, and a geopolitical anchor preserving Yemen’s sovereignty against further collapse.
Analysts view it as calibrated diplomacy: less transactional relief, more sustained leadership in a volatile neighborhood vital to Saudi interests.
As Yemen navigates yet another uncertain year, Saudi Arabia’s latest support may not solve the crisis, but it reiterates a principle increasingly central to Riyadh’s foreign policy: that economic endurance is the cornerstone of security.
