UAE Central Bank willing to extend stimulus package: Governor

The UAE Central Bank on Monday said it is regularly assessing the market situation and is willing to extend its Dh100 billion Targeted Economic Support Scheme announced earlier this week if need arises.

Mubarak Rashed Al Mansoori also warned that lenders in the UAE will not be able to avail funds at zero cost under its stimulus package if they don't extend this facility to customers.

"We will assess the situation and are willing to extend this scheme. We have no hesitation to renew these measures before the end of six months," Al Mansoori told Bloomberg TV in an interview on Monday.

As part of Dh100 billion stimulus plan, Dh50 billion from the Central Bank funds will be used for collateralised loans at zero cost to all banks operating in the UAE and Dh50 billion has been freed up from banks' capital buffers. The scheme, which will cover the next six-month period, is meant to ensure ample liquidity in the banking sector so that they can extend benefits of the stimulus package onto their corporate and retail customers in the country.

"The banks are well capitalised. They are above 17 per cent capital adequacy ratio so there is a lot of room to achieve the objective. If they (banks) don't participate, they don't get zero interest facility from Central Bank," Al Mansoori said during the interview on Monday.

Replying to a query about whether oil price drop or coronavirus will have bigger impact on the economy, the governor noted that the bigger risk for everyone is coronavirus now. "As soon as this virus is contained, things will come back but will take time. Now the ultimate objective is to contain this virus," he said adding that "we have tried to do as much as we can to make it possible for banks to achieve our objective".

Al Mansoori revealed that the GCC central bank governors held a fruitful meeting on Sunday and agreed to coordinate further to combat the Covid-19 impact.

"The UAE, Saudi Arabia and Kuwait announced their packages. Now I want to announce that the UAE government - both at federal and local levels - are coming up with measures on fiscal side," he added.

The GCC central banks governors on Monday held a meeting with Abdullatif bin Rashid Al Zayani, Secretary-General of the Gulf Cooperation Council, through video conferencing to discuss the economic effects of coronavirus, upon an invitation from Mubarak Rashed Al Mansoori.

The meeting's participants expressed their satisfaction at the economic procedures taken, stressing the strength of the banking sectors of GCC countries and their capacity to face challenges and crises. They also committed to drafting weekly reports on the relevant steps taken by GCC member countries in this regard.

waheedabbas@khaleejtimes.com