UAE Central Bank rolls out economic stimulus plans
Vast wealth and the promise of dramatic change make for cautious optimism concerning Saudi Arabia, the chief executive…1641 Views | the publication reaches you by | Saudi Arabia Today
The plans were rolled out on Saturday to ease the impact of the coronavirus outbreak in their respective countries.
The UAE regulator plans to support banks and businesses in the country, where the outbreak is affecting major economic sectors such as tourism and transport, with a 100 billion dirham ($27 billion) economic plan, it said on Saturday.
In a separate statement, the Saudi Arabian Monetary Authority said it had prepared a 50 billion riyal ($13.32 billion) package to help small and medium-sized enterprises (SMEs) cope with the economic impacts of coronavirus.
The Saudi funding aims to grant SMEs six-month deferrals on bank payments, concessional financing and exemptions from the costs of a loan guarantee program, SAMA said.
Concerts, sporting events and industry conferences have been canceled or postponed in the past few weeks in the UAE to contain the spreading of the new coronavirus.
In Dubai, the Middle East’s trade, finance, tourism and transportation hub, some businesses have started to feel the pain from the global travel slowdown caused by the outbreak.
Saudi Arabia, which has already suspended the Umrah pilgrimage and locked down its eastern Qatif region where many infections are located, plans to halt all international flights for two weeks from Sunday.
The UAE central bank said it will provide 50 billion dirhams through collateralized loans at zero cost to all banks operating in the UAE while an additional 50 billion dirhams will be freed up from lenders’ capital buffers.
“The CBUAE is allowing banks to free-up their regulatory capital buffers to boost lending capacity and support the UAE economy,” it said in a statement.
It said the scheme offers banks relief for up to six months from the payments of principal and interest on outstanding loans for affected private sector companies and retail customers.
Adding to a likely economic slowdown caused by the virus, Saudi Arabia and the UAE are also expected to face wider fiscal deficits this year because of lower oil prices, due to an oil price war between Riyadh and Moscow.
The Gulf states’ currencies, which are pegged to the U.S. dollar, weakened in the forwards market last week.
The UAE regulator said on Saturday it maintained its commitment to the peg for the dirham, and said foreign currency reserves amounting to 405 billion dirhams as of March 10 were “adequate” to safeguard the stability of the currency.
Other measures introduced by the UAE central bank on Saturday include reducing by 15-25% the amount of capital banks have to hold for loans to SMEs, and better terms for first-time home buyers.
Importantly for the local real estate sector – which has been struggling in Dubai for the past decade – banks will be allowed to increase their exposure to real estate loans.
“When the exposure reaches 20% of the banks’ loan portfolio (measured by risk-weighted assets), banks will be allowed to increase it to 30%, but will be required to hold more capital,” it said.
The central bank also introduced regulations which reduce banking fees for small companies.
150 take part through Watani Al Emarat via the ‘Your City Needs You’ initiative Over 150 volunteers –…1315 Views | the publication reaches you by | Saudi Arabia Today
Do you have information you want to reach our readers?