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Businesses commended the UAE government’s $27 billion economic plan aimed at containing impact of coronavirus outbreak that has infected 85 people so far in the country.
The economic plan announced on Saturday is expected to boost the morale of company owners, particularly in industries impacted the most by the pandemic.
“[This] is a morale booster for the business community in the entire country. The targeted economic support scheme, which is at the right time, will help the banking sector, as well as companies in the country, run the business smoothly,” Imran Farooq, CEO of Samana Group, told Zawya.
The stimulus package consists of 50 billion UAE dirhams ($13 billion), which will be released through “collateralised" loans at zero interest, and 50 billion ($13 billion) freed up capital from banks’ buffers.
“The purpose of the targeted scheme is to facilitate provision of temporary relief from the payments of principal and interest on outstanding loans for all affected private sector companies and retail customers in the UAE,” the central bank said in a statement.
The virus has now infected more than 140,000 people worldwide, including 86 in the UAE. Flights to and from the country have been suspended, including most of China, Iran and Italy, to contain the spread of the virus, while some public venues, including theme parks and beaches, have been shut.
The series of travel restrictions, flight cancellations, lockdowns and event cancellations are putting a strain on the finances of businesses, particularly in the tourism, hospitality and transport sectors, with airlines in the UAE and other Middle East countries estimated to suffer $4.9 billion (17.9 billion UAE dirhams) in revenue losses.
Economic stimulus
However, with the economic stimulus, Farooq said people in the UAE should now feel reassured, that no matter what happens they are “in safe hands.”
“We now can confidently tell our stakeholders outside the country that the UAE will remain a safe haven for investors and for the people living here,” Farooq added.
AbdulAziz Al Ghurair, chairman of UAE Banks Federation, said the stimulus package will give a significant boost to the banking sector in the UAE and have a far-reaching impact on different sectors.
"During these times of worldwide uncertainty, taking decisive measures like this one is key to ensuring a safe and stable environment, so we commend the UAE’s leadership for their quick efforts to protect businesses and safeguard the wellbeing of citizens,” said Al Ghurair.
“The UAE banking sector has sufficient liquidity and is adequately capitalized, and we are well-positioned to weather challenges that lie ahead,” he added.
Yusuffali MA, chairman of Lulu Group said the government has “risen to the occasion” by pumping billions of dollars into the economy.
“[This] will, no doubt, act as a catalyst for various sectors and the economy as a whole and bring in much-needed relief to all stakeholders,” the retail tycoon told Zawya.
“As the world is waking up to new and negative news every day with [the] spread of this pandemic, I am sure this bold and generous initiative will go a long way in reinforcing UAE’s image as the most investor-friendly and pro-development economic hub in the region,” he added.
Lewis Allsopp, CEO of Allsopp & Allsopp, said the government stimulus will also help ensure the property market stays buoyant.
“The Central Bank of the UAE’s initiative to alleviate the strain on industry finances in the light of COVID-19 could not have come at a better time, as levels of uncertainty are entering the markets,” Allsopp said.
He said the LTV increase now gives buyers who are saving to a deposit a “helping hand” to make their first property purchase in UAE.
According to Kamal Vachani, group director of Al `Maya Group, the financial support will boost business confidence in the UAE and attract investors.
“We are extremely delighted to learn about this. This will give further confidence to businesses. The UAE has always been [supporting entrepreneurs] and has always adopted a pragmatic approach,” Vachani told Zawya.
IHS Markit had said that companies in Dubai are already feeling the economic impact due to coronavirus outbreak, while business confidence has fallen to the lowest level in more than two years.
The seasonally adjusted Dubai Purchasing Managers’ Index (PMI) dropped to a four-year low of 5.0 in February, from 50.6 in January.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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