Markets and commercial circles in Yemen have entered a phase of cautious anticipation after the internationally recognized government began implementing the decision to liberalize the exchange rate of the “customs dollar” and link it to parallel market prices, in a step that the authorities say is necessary to ease pressures on public finances, while economists and importers warn of a new wave of inflation whose effects may extend to various markets and service sectors.
In light of one of the most complex financial crises facing the Yemeni government since the cessation of oil exports in late 2022, the decision sparked widespread economic controversy between those who see it as an urgent measure to enhance public revenues, and those who fear that it will lead to a new rise in prices and the erosion of citizens’ purchasing power.
The decision comes within a package of economic and financial reforms adopted by the government to address the revenue gap, after years of resource depletion and a decline in the ability to finance salaries and basic services.
The government said that it decided to liberalize the price of the customs dollar (the approved price for calculating duties on imports) according to supply and demand mechanisms, with the aim of unifying the sources of collecting state revenues from duties and taxes, addressing price distortions and enhancing the efficiency of collecting public resources.
The historical rise of the customs dollar
The customs dollar in Yemen witnessed a series of successive rises during the last five years, as it was calculated at 250 riyals per dollar, before it was raised to 500 riyals in 2021, then to 750 riyals in early 2023, arriving at the last controversial jump of raising it to about 1,550 riyals in May 2026.
The government says that the decision mainly targets luxury and non-essential goods, while basic goods, such as wheat, flour, medicines, rice, oils and infant formula, will remain exempt or subject to a low customs price.
The authorities justify this step by the need to unify revenue streams, address price distortions, and raise the efficiency of collecting public resources, in light of the decline in oil revenues, which represented the backbone of the public budget.
Customs dollars and compensation for oil losses
In the first extensive digital clarifications from the Yemeni presidency, the presidential economic advisor, Dr. Fares Al-Najjar, said in an exclusive interview with Al Jazeera Net that the state’s revenues from customs duties, taxes, and other revenues did not exceed 698 billion riyals during the year 2025, equivalent to about 443 million dollars at current market prices.
Al-Najjar explained that this figure, despite its improvement compared to the previous year, is still far from oil revenues, which used to exceed one billion dollars annually and constituted between 70 and 75% of the state’s resources.
He added that adjusting the customs dollar “will not compensate for oil losses, but it may alleviate public financial bottlenecks and help the government fulfill its obligations, especially disbursing salaries.”
He considered that keeping the customs dollar at the previous price “was not serving the citizen as much as it was serving some merchants,” explaining that some importers were paying low duties and then selling the goods according to the actual market prices, “so they benefited twice: from the state treasury and from the citizen’s pocket,” as he put it.
Al-Najjar linked the success of the decision to three main factors, including controlling unofficial ports, raising the efficiency of ports and customs, and tightening price controls to prevent any exaggerated increases.
An increase not exceeding 8%
For his part, Muhammad Al-Jamai, advisor to the Minister of Industry and Trade, said that the decision to liberalize the customs dollar comes within the matrix of economic reforms that the government has adopted since 2025 with the aim of reducing the financial deficit and enhancing the state’s ability to collect revenues.
Al-Jamai explained, in an interview with Al-Jazeera Net, that the decision will not affect basic goods exempt from customs, noting that the expected rise in the prices of some goods “will range between 2 and 4%, and may reach 8% in some cases.”
He stressed that the government intends to implement field monitoring campaigns to prevent any manipulation or unjustified increases in prices, in parallel with measures to improve purchasing power that include disbursing a 20% cost of living allowance to state employees.
But government reassurances did not end concerns among importers and the private sector, who believe that the repercussions of the decision may extend to the cost of transportation, shipping, and entire supply chains.
The private sector and fears of supply paralysis
Despite official reassurances, a state of cautious apprehension prevails in commercial circles and the import sector due to the sudden customs jump, as business sector representatives believe that the attempt to limit the impact to luxury goods faces major field complications due to the intertwining of supply chains and the cost of logistics and transportation services.
Importers warn of a potential liquidity crisis that may prompt some companies to reduce their imports or search for alternative ports to reduce customs burdens.
One of the importers in Aden, who requested to remain anonymous, says that the impact of the decision “will be very large,” expecting the prices of some goods to rise by between 20 and 35%, especially with the rise in sea freight costs, which have doubled in recent years.
He adds that some companies may have to reduce their import volume, explaining that “the merchant may reduce his profit margin, but the consumer bears the largest part of the burden.”
“The decision addresses the deficit, but does not stop inflation.”
For his part, Yemeni economic expert Wafiq Saleh believes that the government resorted to liberalizing the customs dollar as a result of the increasing deficit in public finances after the cessation of oil exports, but it did not complete, as he put it, a comprehensive economic reform package that guarantees limiting the effects of the decision on the market and citizens.
Saleh told Al Jazeera Net that the government “is focusing on raising revenues without having real control tools that prevent the increase from being passed on to the final consumer,” warning that rising fuel and transportation prices may lead to a broader wave of inflation affecting various goods and services.
He added that any real economic reform “is supposed to be accompanied by deeper reforms that include resuming oil exports, operating Aden’s refineries, revitalizing productive sectors, and improving the balance of payments.”
Field challenges and rebound effects
Commercial movement within Yemeni markets reveals another aspect of the impact of the decision. During Al Jazeera Net’s field tour of the markets in the city of Ma’rib, the purchasing movement appeared active coinciding with the Eid al-Adha season, with citizens racing to buy their basic needs before any new wave of rise in prices.
But behind this activity, anxiety prevails among small traders and sellers who fear that the increase in customs duties and the rise in fuel and transportation prices will lead to a decline in sales activity and the erosion of their limited profit margins.
Importers believe that the impact of the government decision will gradually extend from the cost of import and shipping to the prices of goods and services, at a time when the purchasing power of citizens is declining under the pressure of the worsening economic crises.
Between the government’s bets on increasing revenues and easing pressures on public finances, and the private sector and experts’ warnings of a new wave of inflation, the Yemeni citizen remains the weakest link in a complex economic equation, while markets await the effects of the decision on prices and living standards during the coming weeks and months.
In a country that relies almost entirely on imports, the customs dollar battle appears to be a new test of the Yemeni government’s ability to balance the needs of the exhausted treasury, the requirements of the market, and the limits of the citizen’s ability to endure.
