Abu Dhabi, UAEThursday 9 July 2020

CORONAVIRUS

UAE Central Bank says lenders draw down on 88% of Dh50bn facility against Covid-19 impact

A total of Dh44bn from the regulator's support scheme has been used to date

The UAE banking system is well capitalised and can witstand shocks of any scale. Ryan Carter / The National
The UAE banking system is well capitalised and can witstand shocks of any scale. Ryan Carter / The National

Banks and financial institutions have drawn down 88 per cent of the Dh50 billion worth of interest-free loans provided by the Central Bank of the UAE to relieve businesses and individuals struggling due to the Covid-19 pandemic.

Banks in the UAE availed of Dh44bn of the allocated funds in the Targeted Economic Support Scheme (TESS) to date, the banking regulator said on Thursday.

"A total of 26 banks availed the TESS liquidity facility, with 17 banks drawing down 100 per cent," the regulator said.

The central bank first rolled out TESS in March as it unveiled a Dh100bn stimulus package to support companies and individuals affected by measures taken to stop the spread of the pandemic. This included the Dh50bn of zero-cost collateralised loans now being drawn down and a loosening of banks' capital buffers, giving them more firepower to lend. Further loosening of capital and liquidity buffers has since increased the size of this stimulus to Dh256bn.

More than 140,000 eligible customers have already benefited from the TESS liquidity facility, the regulator said.

More than 180,000 customers have benefited from support provided outside of the TESS liquidity facility with a total deferral value of about Dh8bn, it said.

Banks in the UAE have announced a series of measures to support customers, including three-month payment holidays on loans, cuts in interest rates and reductions in banking fees.

The UAE has announced an easing of international travel restrictions as the country carried out 3 million tests, making it the top nation for per capita screenings.

From June 23, the emirates will permit international travel to some destinations, based on whether they are low, medium or high risk.

Governments around the world are beginning to ease the restrictions on the movement of people and goods in an attempt to resuscitate their economies.

Airlines worldwide will start to resume flights in June after the Covid-19 pandemic forced months of unprecedented shutdown.

Globally, the pandemic has disrupted daily life, paralysed air travel, roiled stock markets and forced governments and central banks to introduce monetary and fiscal stimulus packages worth more than $10 trillion (Dh36.7tn) as countries went into lockdown over the last few months.

The number of confirmed Covid-19 cases worldwide has exceeded 8.3 million and the total death toll stands at 448,959, according to the Johns Hopkins University, which tracks the spread of the coronavirus globally. More than 4 million people have recovered.

The global economy is recovering more slowly than expected from the coronavirus pandemic and will bear lingering scars from the experience, according to the International Monetary Fund.

The IMF is set to release economic growth projections June 24 that “will be, very likely, worse than what we had” in April, even as there remains “profound uncertainty” around the forecasts, Gita Gopinath, the IMF’s chief economist, said in a video recorded June 4.

Updated: June 18, 2020 11:49 AM

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