The United Arab Emirates central bank said it has extended until mid-2022 some stimulus measures introduced last year to mitigate the impact of the coronavirus crisis on the economy.
Banks will continue to be eligible to access a collateralized AED50 billion ($13.61 billion) zero-cost liquidity facility until June 30 next year, the central bank (CBUAE) said in a statement on Tuesday.
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.
Banks can draw on the facility to provide new loans and financing to individuals, small and medium-sized enterprises and other private corporates affected by the virus fallout.
“Financing provided by the bank for loan deferrals under the TESS scheme will be extended until the end of 2021, while outstanding financing for deferrals will be fully phased out by 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.
CBUAE Governor Khaled Balama said the extension of the program will “allow continued support by the financial system to the sectors negatively affected by the COVID-19 pandemic.”
“It aims to support the recovery phase, in line with the [central bank] mandate to ensure financial and monetary stability,” he explained.
According to the International Monetary Fund, UAE’s real gross domestic product (GDP) is expected to grow 3.1 percent in 2021.
Last week, S&P Global Ratings said in a report that 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.
