The Central Bank of the United Arab Emirates has decided to gradually do away with all the stimulus measures introduced in the wake of the outbreak of the Covid infection in the country. The steps had been taken to cushion the economy from the blows of the Covid curbs imposed in Emirates and around the world.
The central bank said it has assessed the UAE’s financial system as stable. The liquidity in the banking system and banks’ capital buffers remained adequate, the regulator said following in a meeting of the country’s bank chiefs on Tuesday.
Khaled Mohamed Balama, Governor of the CBUAE, said: “Our assessment, confirmed by recent economic data, affirms the UAE economy’s gradual recovery. As we enter the next phase of the post-COVID recovery, there will be less need for extraordinary relief measures. We expect that banks will do their part in supporting our economic recovery and ensure the continued flow of funds to creditworthy retail and corporate borrowers.”
In view of this, the central bank “is starting a gradual and well-calibrated withdrawal of its Targeted Economic Support Scheme (TESS) to avoid restricting credit supply and economic growth.”
The CBUAE also confirmed, that in the short term, it will leave unchanged the temporarily lowered reserve requirements for banks, and the level of the loan-to-value ratio applicable to mortgage loans for first-time homebuyers.
The regulator also said it may extend beyond the end of this year regulatory relief measures that allow banks to maintain lower capital and liquidity buffers, depending on the pace of economic recovery and loan demand.