UAE central bank stimulus will ‘soften coronavirus’ blow to economy:’ Moody’s
The 100 billion dirham ($27.2 billion) stimulus package announced by the UAE central bank on Saturday will “soften coronavirus’ blow to economy and banks,” according to a research note from credit ratings company Moody’s Investors Service.
The stimulus package follows a raft of similar measures taken by other central banking bodies around the world as authorities move to contain the economic fallout of the coronavirus, officially known as COVID-19.
“We expect the coronavirus to negatively affect the UAE's key non-oil sectors of tourism, transportation, trade and real estate, which is likely to result in a broad-based shock to the UAE’s economy,” the research note said.
The central bank’s support package will private funding for banks to grant relief from interest payments for up to six months to all private sector and retail borrowers that are economically affected by the virus.
“Although we still expect UAE banks’ asset quality to materially deteriorate amid the current difficult environment, the support scheme will mitigate the extent of the deterioration by keeping some borrowers' liquidity issues from becoming solvency issues… The funding scheme will also support banks’ liquidity by providing cheap funding to meet cash calls from affected borrowers,” the note continued.
The coronavirus pandemic has continued to spread worldwide with nearly 200,000 infected and nearly 8,000 dead. Over 80,000 have recovered.
The UAE has reported 113 infected, with 26 recoveries.