The deposit comes as the Saudi-backed administration struggles to handle weak currency and high fuel and commodity prices.
The announcement on Tuesday comes as the Saudi-backed administration struggles with a weak currency and high fuel and commodity prices after nearly nine years of war.
Riyadh intervened militarily in March 2015, months after the internationally recognised government was overthrown by Houthi rebels, who control the capital, Sanaa, and large swaths of the country’s north.
It was not immediately clear whether the $1bn was part of an existing $3bn support package pledged last May by Saudi Arabia and the United Arab Emirates for Yemen’s economy.
The internationally recognised government based in the south had seen its public finances worsen after the Houthis launched a series of attacks on terminals there late last year that hampered oil exports, a key revenue source.
In November, the Arab Monetary Fund based in the UAE capital, Abu Dhabi, signed a $1bn agreement to support Yemen’s economic reform programme.
Last month, the Aden-based government raised the US dollar exchange rate used to calculate customs duties on non-essential goods by 50 percent amid dollar shortages, sending prices to all-time highs.
On Tuesday, the rial was trading at 1,225 to the US dollar on the black market in Aden, traders said.
Yemen has two rival central banks. The government has resorted to money-printing to finance the deficit, but in Houthi-held areas, where new notes are banned, the rate is around 600 rials to the dollar.
Yemen, the poorest country on the Arabian Peninsula, has been devastated since 2014 when the Houthi rebels, linked to Iran, removed the government of President Abd-Rabbu Mansour Hadi.
Since then, the Houthis and a pro-government force supported by a Saudi-led military coalition have been engaged in fighting, killing tens of thousands of people and leaving 80 percent of the population reliant on aid, with millions hungry.
In April 2022, Houthi rebels and the internationally recognised Yemeni government based in Aden agreed to a two-month United Nations-sponsored truce.
The fighting has largely stopped but both parties have failed to renew several other UN-brokered truces that expired in October.
Saudi Arabia’s foreign minister said in January that progress was being made towards ending the war but more work was needed, including transitioning to a permanent ceasefire.
