UAE initiates stimulus plans to offset COVID-19 impact

Ahmed Adel

The wise leadership of the UAE has managed to balanced between taking protective measures against the outbreak of the novel coronavirus (COVID-19) and preserving the country’s economy and business environment.

The UAE Cabinet has approved Dh16 billion economic stimulus package as part of the Federal Government’s additional measures to support the national economy, ensure businesses continuity, and mitigate the coronavirus impact.

This came during a virtual meeting held Sunday under the chairmanship of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, as a preventive measure to protect everyone from the COVID-19.

The latest financial support complements those announced recently by the emirates of Abu Dhabi and Dubai, along with that of the Central Bank of the UAE, taking to Dh126.5 billion the total value of stimulus packages introduced since the COVID-19 outbreak to survive the current challenging conditions.

The measures include a renewable six-month suspension of work permit fees and reduction of labor and other charges to cut the cost of doing business, support small businesses and accelerate major infrastructure projects.

Moreover, the UAE government announced suspension of collection of administrative fines by the Ministry of Human Resources and Emiratization for a period of 6 months, which can be extended, as well as a reduction of work permit fees for establishments that have a registered workforce of 1 to 6 workers.

Also, Firms will get back 50% of the bank guarantee they submitted for each employee.

“I’ve discussed with officials in Abu Dhabi the current economic and business climate…the existing stimulus programs in Abu Dhabi and those launched recently by the Central Bank & local governments are the solid pillars that will support and protect the UAE’s economic stability,” Sheikh Mohammed tweeted.

“I’ve given further directives to put plans to stimulate strategic investment sectors, and to form a new committee headed by the Department of Finance, with members from the Department of Economic Development and local banks to review lending options to support local companies.

“Our authorities will continue developing and easing the investment laws and regulations, making them more flexible to maintain our economic development. We are confident in the resilience of our national economy and its ability to navigate market fluctuations.”

Three government work teams were assigned to ensure the continuity of services and effective functioning of remote work systems. They will also constantly assess the impacts of the coronavirus.

The UAE Central Bank has announced pumping in Dh100 billion as stimulus package to offset the slowdown in the economy set off by the coronavirus outbreak and subsequent drop in business activity.

This will be split into Dh50 billion from the Central Bank’s own funds, which will be offered to local banks at no interest rates. These will be routed as collateralize loans to the borrowing banks, while the other Dh50 billion will be tapped through the capital buffers operated by banks operating in the country.

Banks who use the Central Bank funds can use it to give “temporary relief” to private sector businesses and individual clients for a period of up to 6 months.

The Central Bank also reduced the amount of capital banks have to hold for their loans to SMEs by 15 to 25 percent. “This change will facilitate further access of SMEs to financing.”

In March 2020, Emirates NBD, the biggest bank by assets in Dubai, along with the UAE’s largest Sharia-compliant lender Dubai Islamic Bank, Emirates Islamic, Mashreq and Commercial Bank of Dubai announced a series of support measures and 12 initiatives for customers that will remain in effect for three months starting April 1.