UAE Central Bank extends economic support until mid-2022
The Central Bank of the UAE (CBUAE) has extended several measures included in its Targeted Economic Support Scheme (TESS) until June 30, 2022, with the aim of supporting the continuous recovery of the country's economy. Accordingly, the precautionary measures regarding capital reserve requirements, liquidity and stable funding requirements for banks will be extended until the end of June 2022.
All banks operating in the country will be able to take advantage of these measures to support a balanced and sustainable recovery, the CBUAE said in a statement issued on Saturday. It also added that it was extending the TESS programme to support new lending and financing, as well as prudential relief measures regarding banks’ capital buffers and liquidity and stable funding requirements Earlier, the CBUAE announced financing programme for loan deferrals under the TESS that has been extended until the end of 2021. The outstanding financing for the TESS deferrals shall be fully phased out by 31 December 2021.
It serves as the first stage of the CBUAE's strategy for a gradual exit from the measures that have been applied during the pandemic. In addition, financial institutions will continue to be eligible to access the collateralised Dhs50 billion zero-cost liquidity facility up to 30 June 2022 to provide new loans and financing to individuals, small and medium-sized enterprises, and other private corporates affected by COVID-19 repercussions.
The CBUAE’s strategy for a gradual exit from TESS will include a balance between lifting measures on the one hand and a continuous commitment to support the recovery being witnessed by the country's economy on the other hand. On his part Khaled Mohamed Balama, Governor of the Central Bank of the UAE, said, “The TESS has proven its effectiveness in supporting the financial system of the UAE and the national economy throughout the pandemic period.
With the economic recovery gaining noticeable progress, the CBUAE modified the TESS, where the measures developed to reduce the immediate negative effects of the pandemic have been replaced by measures aimed to support the economic recovery.”