|17 March, 2020

UAE stimulus will offset COVID-19 losses and boost economic growth in Q2 - experts

"Recent government measures are commendable, sizable and timely, with markets responding positively to them"

Abu Dhabi Skyscrapers View of Abu Dhabi skyscrapers and fountains in the foreground.Image used fro illustrative purpose.

Abu Dhabi Skyscrapers View of Abu Dhabi skyscrapers and fountains in the foreground.Image used fro illustrative purpose.

Getty Images/ jayk7

Analysts and business leaders have welcomed the Abu Dhabi Executive Council’s and the UAE Central Bank's stimulus packages, aimed at offsetting the impact of the coronavirus pandemic by supporting economic activity and businesses, hailing it as a timely measure that will drive economic growth in the UAE.

While the UAE Central Bank on Saturday rolled out 100 billion dirhams stimulus package meant to promote lending to SMEs, encourage mortgage applications, increase loans to the property sector, reduce fees on credit cards and limit stock market volatility, the main packages announced by the Abu Dhabi Executive Council on Monday include an allocation of AED 5 billion for water and electricity subsidies for citizens and the commercial and industrial sectors.

An additional AED 3 billion has been allocated for the SME Credit Guarantee Scheme to assist SMEs in navigating the current market.

“Recent government measures are commendable, sizable and timely, with markets responding positively to them,” Ehsan Khoman, Director and Head of MENA Research and Strategy, told Zawya. “These stimulus announcements will offer a welcome boost to economic growth heading into the second quarter.”

The Executive Council has also allocated AED 1 billion to establish a market maker fund, to enhance liquidity and sustain balance between supply and demand for stocks. Other initiatives announced include exemption of all commercial and industrial activities from Tawtheeq fees, as well as exempting individual and commercial real estate registration fees for this year, suspension of bid bonds, and exempting startups of performance guarantees for projects up to AED 50 million.

"Any fiscal initiative aimed at enhancing the competitive environment to ease the burden of corporates to steer through this ultra-bearish downturn will be very welcome. Such measures could include easing market and custom fees whilst in conjunction bolstering government expenditure though this may now be hindered by the precipitous fall in oil prices," Khoman said.

"The Targeted Economic Support Scheme (TESS) includes a 50 billion dirhams package for banks through collaterised, zero-interest rate loans. Moreover, banks will also be permitted to free up capital buffers, which will provide a further 50 in liquidity available to lenders," he said about the UAE Central Bank's stimulus package

Founder Chairman and Managing Director Dr Azad Moopen of Aster DM Healthcare told Zawya: "The new measures being announced for reducing utilities costs will help each and every resident. The announcement of waivers for many fees and exemptions will have a significant impact on the business front. On the whole, it is highly laudable that these measures are being taken to keep the economy vibrant and active in difficult times."

UAE-based Aster DM Healthcare operates over 300 healthcare facilities, including hospitals, clinics and pharmacies, across nine countries.

"The latest initiatives launched by the Abu Dhabi Executive Council and the 100 billion dirhams support package launched by the UAE Central Bank will strengthen the resilience of our economy," said Mohamed Khalifa Al Mubarak, Chairman of Aldar Properties, Abu Dhabi’s leading property developer and investor. Aldar on Tuesday announced programmes worth 100 million dirhams aimed at supporting its residents, tenants, customers and partners.

The key programmes announced by Aldar include providing tenants of its over 5,000 unit residential portfolio with monthly payment plans to support and ease rental commitments until the end of 2020 and allocating 4 billion dirhams towards the timely payment and fulfilment of Aldar’s commitments to its contractors, consultants and suppliers.

(Reporting by Seban Scaria , editing by Daniel Luiz)

seban.scaria@refinitiv.com

#UAE #stimulus #economy #coronavirusoutbreak 

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here

© ZAWYA 2020

More From GCC