U.A.E. Amps Up Stimulus, Unveils New Aid Package

(Bloomberg) --

The United Arab Emirates is unlocking new aid and slashing banks’ reserves requirements as the coronavirus pandemic shuts down much of the economy.

The central bank presented measures that it said would release 61 billion dirhams ($16.6 billion) to support lending to the economy and banks’ liquidity management. Measures include:

• Allocating 256 billion dirhams for capital and liquidity steps, including 50 billion dirhams in capital-buffer relief, 50 billion dirhams for zero-cost funding support, 95 billion dirhams in liquidity-buffer relief and 61 billion dirhams to halve the cash reserves requirement.
• Extending the duration of its support plan for retail and corporate customers until the end of 2020
• Allowing lenders to defer borrowers’ payments on principal and interest until the end of 2020.

“The additional measures announced today will effectively relieve the pressure on financial institutions, allowing them to continue to carry out their crucial role as the backbone of the economy,” the newly appointed central bank governor, Abdulhamid Saeed, said in a statement.

Saeed, former head of the U.A.E.’s biggest lender, First Abu Dhabi Bank PJSC, was named governor last week.

Business conditions in the United Arab Emirates worsened at a record pace in March after emergency steps were taken to stop the spread of the virus, IHS Markit reported earlier. Business and travel across the region are in lockdown to stop the spread of the disease, and on Saturday, Dubai, which is part of the U.A.E., said it will impose further restrictions on the movement of people as it seeks to limit the spread of the virus.

The U.A.E. has reported 1,505 virus cases, including 10 deaths.

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