Abu Dhabi: United Arab Emirates banks have a strong enough capital base to withstand any shocks that may result from the restructuring of Dubai World's debt, said Younis Al Khoori, director general of the Finance Ministry.
The ministry has ensured that banks have "enough capital to absorb any shock that might come", Al Khoori told reporters in Abu Dhabi yesterday.
Assessment
"A Finance Ministry committee is meeting monthly to assess the strength of local banks and so far there has been no need for a further capital injection," Al Khoori said.
He didn't say whether a plan was being prepared to help banks deal with possible writedowns or extensions to Dubai World debt as a result of the restructuring talks.
State-owned Dubai World is in talks with creditors to restructure $26 billion in debt. UAE banks are owed a total of about $10 billion (Dh36.7 billion) by Dubai World, with two-thirds of that owed to Dubai-based banks, according to the International Monetary Fund.
Tax
The IMF also ran stress tests on the UAE banks and recommended "contingency planning" in a report last month. Banks have only used Dh50 billion of a Dh70 billion facility set up to support them in 2008, Al Khoori said.
The Gulf state doesn't expect to issue federal bonds this year because its debt office is still not fully operational, Al Khoori said.
The UAE announced last year that it planned to issue a federal bond.
The region is studying the implications of a value added tax, the time-frame of which has not been decided, Al Khoori said.
The IMF said in a report on the country last month that the UAE may introduce VAT in 2010.
