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Alabbar Urges More Measures to Shore Up Domestic Liquidity

DUBAI - UAE authorities should take further steps to shore up domestic liquidity and eliminate widespread fears in banking and business community about the bleak global economic outlook and its local impact, said Mohamed Alabbar, the head of the The Advisory Council appointed by the government to address the challenges posed by the credit crunch.

He said the sudden exodus of a huge amount of speculative money invested on expectation of a dirham revaluation and the exit of foreign investors from the local stock markets coupled with a widening imbalance in the overall deposit to lending ratio had aggravated the impact of global financial turmoil on Dubai.

Speaking at a meeting held at the Dubai Economic Council to review the crisis and its impact on Dubai economy, Alabbar said the Advisory Council was trying to assess the extent of the challenges in order to come out with effective proposals to tackle the situation so that the impressive economic progress achieved by Dubai over the past years would be maintained.

“The Government will press ahead with all the infrastructure projects under way. The move certainly will have positive impact on local markets,” Alabbar said.

He praised the timely action taken by the UAE government and the Central Bank in boosting the liquidity by making available a total of Dh120 billion to the financial system. Measures including blanket guarantee on all bank deposits and the provision of lending guarantees between banks had helped to restore market confidence, he said. Alabbar also urged the media to act proactively by avoiding exaggeration and refraining from stoking rumours on the extent of indebtedness of the economy.

According to him, the total value of the assets of the Dubai government and affiliate companies was well over Dh1.3 trillion while their aggregate debt obligations stood at Dh288 billion. He said The Advisory Council, formed at the direction of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, would help ensure the long-term stability and growth of the key sectors of the economy.

Juma Al Majed, Chairman of DEC, said the UAE economy could withstand the crisis better than other countries thanks to its inherent strength and the pragmatic action taken by the government.

Sultan bin Sulayem, Chairman of Dubai World, said the need of the hour was concerted efforts to eliminate fear and restore trust in local market through immediate and non-traditional action. Saeed Al Ghandi stressed the importance of injecting additional liquidity in the local market while Shaikh Khalid bin Zayed Al Nahyan proposed the establishment of a central body in the UAE and also at the GCC level to manage the crisis on a daily basis.

issacjohn@khaleejtimes.com