UAE: New debt policy to stimulate financial sector
The introduction of the securities should begin the development of a secondary market for local currency debt.
The public debt strategy unveiled by the UAE on Sunday will have a significant impact on elevating the nation’s global competitiveness standing and improving macroeconomic management, said Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, and Minister of Finance.
Sheikh Hamdan said on Monday that the debt strategy, which seeks to develop the UAE’s market for local currency bonds, would stimulate the country’s financial and banking sector; provide financing alternatives for government development projects; and establish a bond market in the local currency.
“The strategy supports the UAE’s efforts to attain a competitive economy, and enhance financial planning for the federal government,” said Sheikh Hamdan.
He said the move also helps lay the foundations for public debt operations management, and achieve financial sustainability – by enhancing investor confidence in the national economy.
“This contributes to strengthening the country's standing in global competitiveness indices to be the best country in the world by the UAE Centennial 2071,” Sheikh Hamdan said.
The UAE government does not currently issue debt, but individual emirates do tap bond markets. Over the past two years, the federal government has been putting the infrastructure in place to issue debt denominated in dirhams.
A Public Debt Law allowing the issuance of federal bonds was passed in 2018. In December, the Central Bank of the UAE said it would begin issuing dirham-denominated securities known as M-Bills in January.
Global ratings agency S&P Global said that the introduction of the securities should begin the development of a secondary market for local currency debt, which could result in the creation of a risk-free pricing benchmark for dirham-denominated debt over the longer term.
According to debt market experts, a local currency bond market goes a long way in strengthening the UAE’s financial markets, increasing monetary policy options and attracting longer term portfolio flows, all of which support the very important efforts to mobilise private capital and build a more resilient and diversified economy.
Over the last four years, the company has empowered over 250,000 UAE... READ MORE
Asian currencies have started marginally stronger against the... READ MORE
Roughly 40 per cent of online shoppers mention quick delivery as an... READ MORE
Company will highlight how technology can play a key role in building ... READ MORE
Winds may cause blowing dust and sand READ MORE
The billionaire, who stepped down as the company's CEO last year, was ... READ MORE
Stranded expat workers advised to register grievances with relevant... READ MORE
Shashi Tharoor's World of Words is a weekly column in which the... READ MORE