UAE banks avail Dhs44.72bn of TESS liquidity scheme by end July

Upto Dhs44.72bn of the Dhs50bn liquidity facility, part of Targeted Economic Support Scheme (TESS), has been drawn by UAE lenders until the end of July, the Central Bank of the UAE (CBUAE) confirmed.

On March 15, the CBUAE announced the Dhs100bn TESS stimulus package, which included Dhs50bn of zero-interest, collateralised loans for UAE-based banks and also Dhs50bn funds freed up from banks’ capital buffers. The scheme was to help mitigate the fallout of the Covid-19 pandemic and to prop up the economy.

Read: UAE Central Bank announces Dhs100bn package to counter Covid-19

Participating banks should use the funding to offer temporary relief to private sector and retail customers for a period of up to six months.

A total of Dhs44.38bn has been withdrawn until end June, Dhs42.33bn until end of May and Dhs31.85bn by the end of April.

Up to 26 banks availed the TESS liquidity facility, with 17 banks drawing down 100 per cent, CBUAE confirmed in June.

Read: UAE Central Bank’s TESS liquidity scheme availed by 26 banks

The UAE economy will suffer a deeper contraction this year than first estimated, dragged down by disruptions caused by the coronavirus pandemic, according to the country’s central bank.

Gross domestic product will shrink 5.2 per cent in 2020, compared with a previous forecast for a decline of 3.6 per cent, the central bank said in its quarterly review on Wednesday.

GDP in the Arab world’s second-largest economy dropped an estimated 7.8 per cent last quarter after a 0.8 per cent contraction in the prior three months, it said.

“As a regional trade, tourism and transportation hub, the UAE economy was hit by the general ban on travel, while manufacturing production shrunk due to supply chain disruptions, limited export opportunities and subdued domestic demand,” the central bank said.

The outlook is slightly worse than forecasts compiled by Bloomberg, which see a decline of 5.1 per cent this year. The UAE economy last contracted by over 5 per cent in 2009, according to the International Monetary Fund.

With inputs from Bloomberg