The issuance of the first tranche of a $20 billion (Dh73bn) bond by Dubai Government should be sufficient to meet the emirate's refinancing needs this year and lend stability to the economy over that time, Standard Chartered bank said in a research note yesterday.
"Yet, we believe more direct measures to improve liquidity need to be taken. The gap between bank deposits and loans at the end of January showed a need for over Dh100bn. This gap needs to be bridged in order for the advance-to-deposit ratio to drop and allow banks to resume lending," the bank said.
Last week the Dubai Government issued a $20bn long-term bond programme, selling the first half to the UAE Central Bank. Standard Chartered view reinforces what UAE Economy Minister Sultan bin Saeed Al Mansouri said at the Abu Dhabi Economic Forum on Monday that government measures taken so far should be sufficient to stabilise Dubai's economy for at least nine months.
Dubai developers, meanwhile, have access to up to $2.2bn from escrow accounts to cover construction commitments, the emirate's property regulator said last week.
Mansouri was quoted by Reuters as saying that he was "comfortable" about the situation of the UAE economy. "I don't think there will be recession in the UAE," Mansouri said. "There will be a slowdown because we are part of the world and we will be affected."
Since the global financial crisis deepened in September, the UAE Central Bank and the Finance Ministry have launched Dh120bn of funding facilities for banks in order to unlock credit markets.
"Believe me, it (the recovery) will be sooner than many people predict," AFP quoted Sheikh Nahyan bin Mubarak Al Nahyan, UAE Minister of Higher Education and Scientific Research, as saying on Sunday.
"We are fortunate that our government has taken many steps to address the issue" of the economic slowdown. "These policies have kept our country in a reasonably good shape in face of the crisis," he said at the Forum.
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