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UAE central bank extends stimulus measures to mid-2022 to drive economic recovery 

The United Arab Emirates central bank said on Tuesday it has extended until mid-2022 some stimulus measures introduced last year to mitigate the impact of the coronavirus crisis on the economy.

The Targeted Economic Support Scheme (TESS) helps banks provide temporary relief to companies and individuals affected by the COVID-19 pandemic and facilitates additional lending capacity through the relief of existing capital and liquidity buffers.

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Banks will continue to be eligible to access a collateralized 50 billion dirham ($13.61 billion) zero-cost liquidity facility until June 30 next year, the central bank (CBUAE) said in a statement on Tuesday.

Financing provided by the bank for loan deferrals under the TESS scheme will be extended until the end of this year.

“The CBUAE expects financial institutions to prioritize lending through the TESS to the most negatively affected sectors, businesses, and households, contributing to a balanced revival of the UAE’s diversified economy,” it said.

The International Monetary Fund estimates that the UAE’s economy suffered a 5.9 percent contraction last year as vital sectors such as tourism and aviation were badly hurt by restrictions to contain the novel coronavirus.

Real gross domestic product is expected to grow 3.1 percent this year, according to the IMF.

The pandemic, as well as lower oil prices and a sluggish real estate sector – an important component of the UAE’s GDP – weighed on UAE banks last year.

Non-performing loans stand at 10.6 percent of total loans, the highest ratio since 2005, Capital Economics has estimated.

Continued pressure from real estate due to oversupply, as well as lower demand for the tourism, hospitality and aviation sectors will likely continue to weigh on banks’ asset quality in the next 12 to 24 months, S&P Global Ratings said in a report last week.

But it said banks are expected to maintain “adequate sources of funding and liquidity” amid a rebound in oil prices.

On Tuesday Emirates NBD, Dubai’s largest bank, posted a 12 percent increase in first-quarter net profit citing improving economic conditions from the COVID-19 pandemic fallout and a drop in impairments.

Next articles

UAE’s President Sheikh Khalifa appoints new central bank governor

UAE appoints new central bank board members

UAE central bank extends $13.6 bln stimulus measure until end of the year



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