There is no liquidity crisis in the UAE banks as they have high liquidity and do not need additional support and profits change according to allocations, said the UAE Central Bank Governor Sultan bin Nasser Al Suwaidi.
"The international financial crisis has stabilised somehow, which was positively reflected on the UAE," he said, adding that the economic growth of UAE will not be big in short term but we should not talk about inflation because its rate will be very low.
Reiterating the UAE's stand on staying away from the GCC monetary union, Al Suwaidi made it very clear that the dirham-dollar peg will continue to remain.
There were concerns expressed by a section of financial analysts about the constraint the dollar peg can create against having an independent monetary policy for the country.
Talking to the press on the sidelines of a function organised for the inauguration of the new headquarters of Sharjah Islamic Bank (SIB), Al Suwaidi acknowledged that the banks will end up having to make larger provisions compared with the previous year. It remains a fact that the past year had been one of the toughest years for the banks in the recent times and posed many challenges.
Responding to a specific question seeking to quantify the level of provisions for the banks for the past year and going forward, he said that there are well defined norms that guide the banks on provisioning and these are based on International Accounting Standards. "We will make sure that the banks will follow the calibrated guidelines on provisioning," he said
Central Bank has recently initiated new steps to bring in line with international norms, the terms for making provisions. Al Suwaidi did not have anything to hide on matters regarding recession. "The UAE like the rest of the world is yet to come out of the recession fully. However, we will see the economy grow in the next year albeit, moderately," he said.
Referring to the inflation, he said the UAE will witness inflation, but in small figures. Noting that the property prices have fallen substantially during the past 18 months, he said the current prices are quite attractive for the buyers.
Al Suwaidi refused to comment on the prospective Amlak-Tamweel merger. "These are matters lying with a committee specifically created to look into the merger of these companies, and I am sure the committee is working on it and a result will come through soon."
Talking to Emirates Business, analysts said the biggest challenge before the banks in the UAE would be about raising funds. (With inputs from Wam)
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