Governor of the Central Bank of the UAE (CBUAE) Abdulhamid M. Saeed Alahmadi said on Monday that the overall liquidity of the nation’s banking system has returned to pre-Covid levels.
The observation was made during a meeting between Alahmadi with CEOs of the largest banks operating within the country.
The central bank said this week that the banks’ drawdown of the dedicated TESS zero-cost liquidity facility was AED22 billion (USD5.9 billion) in March 2021, down from the maximum drawdown of about AED44 billion (USD11.9 billion) in Q2 2020, consistent with the temporary nature of the payment deferral scheme.
“It is satisfying to see that the TESS program has yielded positive impact for the UAE’s banking sector and the wider economy. The introduction of the stimulus package came at a critical juncture and ensured that banks were able to mitigate funding and liquidity pressures and maintain their lending capacity,” the governor added.
According to a statement from the central bank, from the inception of the TESS program, more than 320,000 customers, including individuals, small to medium-sized enterprises, and other private corporations have benefitted from it.
There are about 175,000 customers under the current TESS deferral arrangements.
“Our base projection envisages recovery of the UAE economy in 2021 with the real GDP to increase by 2.5 percent. CBUAE will continue to closely monitor market and economic developments both in the UAE and globally,” said Alahmadi.
In November 2020, the CBUAE extended the validity of key components of the TESS scheme including the zero-cost liquidity facility and the TESS loan deferral and recovery program until June 30, 2021, along with other regulatory relief measures, which will remain in place through 2021.
