UAE central bank extends some stimulus measures until mid-2022

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A general view of the Business Bay area, after a curfew has been imposed to prevent the spread of coronavirus disease (COVID-19), in Dubai, United Arab Emirates, March 28, 2020. REUTERS / Satish Kumar / File Photo

The UAE’s central bank said on Tuesday it had extended until mid-2022 some stimulus measures introduced last year to ease the impact of the coronavirus crisis on the economy.

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

Banks will continue to be eligible to access a guaranteed zero-cost liquidity facility of 50 billion dirhams ($ 13.61 billion) until June 30 next year, the central bank (CBUAE ) in a press release.

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

“The CBUAE expects financial institutions to prioritize loans through TESS to the most affected sectors, businesses and households, thereby contributing to a balanced revival of the UAE’s diverse economy,” he said. -he declares.

The International Monetary Fund estimates that the UAE economy suffered a 5.9% contraction last year, with vital sectors such as tourism and aviation being severely affected by restrictions aimed at containing the new coronavirus.

Real gross domestic product (GDP) is expected to grow 3.1% this year, according to the IMF.

The pandemic, along with falling oil prices and a sluggish real estate sector – a major component of the UAE’s GDP – weighed on UAE banks last year.

Non-performing loans represent 10.6% of total loans, the highest ratio since 2005, Capital Economics estimated.

Continuing pressure from real estate due to oversupply, as well as falling demand in the tourism, hospitality and aviation sectors are likely to continue to weigh on the quality of banks’ assets over the course of time. the next 12 to 24 months, S&P Global Ratings said in a report last week.

But he said banks should maintain “adequate sources of funding and liquidity” amid a rebound in oil prices.

Emirates NBD, Dubai’s largest bank, posted a 12% increase in first-quarter net profit on Tuesday, citing improving economic conditions due to the fallout from the COVID-19 pandemic and lower disabilities.

(1 USD = 3.6728 UAE dirham)

Our Standards: Thomson Reuters Trust Principles.



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