UAE central bank extends $70 bln stimulus scheme to stem Covid-19 impact
The United Arab Emirates (UAE) central bank said on Monday it had extended to June 2021 the applicability period of key components of a stimulus scheme to support retail and corporate banking customers and accelerate recovery from the coronavirus pandemic.
In March the CBUAE launched $70 billion worth of capital and liquidity measures as part of a Targeted Economic Support Scheme (TESS) aimed at providing economic stimulus during the coronavirus crisis.
The CBUAE will extend for another six months, starting from January, the duration of a 50 billion dirhams ($13.6 billion) “Zero Cost Facility” aimed at easing liquidity management for banks through collateralised funding at zero cost.
“Starting from 1 January 2021, banks and finance companies participating in the TESS will be able to provide new loans and facilities to customers negatively affected by the pandemic” within the terms set by the TESS scheme, it said in a statement.
The UAE economy is expected to shrink by 6.6% this year, the International Monetary Fund (IMF) has estimated, as vital sectors such as transportation and tourism have been badly hit by the coronavirus.
Lower oil prices are weighing on the country’s finances, with the government expected to post a deficit of 9.9 percent of GDP, up from a 0.8 percent shortfall in 2019, according to the IMF.
“We believe that this initiative will shield the economy from the impact of the pandemic and place us in an ideal position to recover, once the pandemic is over,” said the central bank’s governor, Abdulhamid Saeed.
The IMF expects the UAE economy to swing back to growth of 1.3 percent next year.