Real economy projected to grow 2.5 pc in FY21
ABU DHABI/March 18-2021: While the Targeted Economic Support Scheme (TESS) introduced by the Central Bank of the UAE has completed a year on March 15, the aggregate drawdown by the banks has fallen by 50 per cent to AED22 billion from the peak level at AED44 billion witnessed during the second quarter of 2020.
The Central Bank said that since the inception of the TESS programme, which was launched with a view to mitigating the implications of the COVID-19 pandemic on the UAE’s economy, more than 320,000 customers, including individuals, small to medium-size enterprises and other private corporations have benefitted from it.
The Central Bank also said there are about 175,000 customers under the current TESS deferral arrangements. The fall in the volume of the scheme is consistent with the temporary nature of the payment deferral scheme.
The Governor of the Central Bank, Abdulhamid M. Saeed Alahmadi, noted that in tandem with the banking sector, the CBUAE is paving the way for the UAE’s robust economic recovery from the pandemic.
Recovery of UAE economy
“Our base projection envisages recovery of the UAE economy in 2021 with the real GDP to increase by 2.5 per cent. “CBUAE will continue to closely monitor market and economic developments both in the UAE and globally,” he added.
TESS is a comprehensive program covering all CBUAE measures in response to the COVID-19 pandemic. In November 2020, the CBUAE extended the applicability period of the TESS zero-cost liquidity facility and the TESS loan deferral and recovery programme until June 30, 2021, along with other regulatory relief measures, which will remain in place through 2021.
Meeting with bank CEOs
The Governor of the Central Bank of the UAE (CBUAE), conducted last week the first quarterly meeting this year with the CEOs of the largest banks operating in the UAE.
The meeting’s agenda focused on the effectiveness of the TESS in mitigating the implications of the COVID-19 pandemic.
Transition from IBOR
The Governor also discussed other issues impacting the country’s banking sector, such as the transition from the existing interbank offered rate IBOR to alternative reference rates and the role of the banking system in supporting the post-COVID recovery of the UAE economy.
The introduction of the stimulus package came at a critical juncture and ensured that banks were able to mitigate funding and liquidity pressures and maintain their lending capacity.” The Governor and banks’ CEOs noted that the overall liquidity of the UAE banking system has returned to the pre-COVID level.