Dubai: The Central Bank of UAE is likely to retain some elements of its Targeted Economic Support Scheme (TESS) beyond June 2022.
The CBUAE said in a statement that the planned completion of the Phase 2 of the TESS exit is by mid-2022, while some TESS measures that support the recovery will remain in place for the time being.
The central bank added that it is closely monitoring the evolving situation globally and stands ready to take additional measures if necessary.
Speaking at the UAE Bank CEOs Forum, a quarterly dialogue which aims to enhance the development of the UAE banking sector, Khaled Mohamed Balama, Governor of the CBUAE, said: “The CBUAE aims to support the competitiveness of the UAE’s financial system. We share an ambition with the UAE banks to propel the UAE banking sector to be among the best globally.”
The CBUAE and UAE bank CEOs discussed the global and UAE economic recovery that commenced during 2021 and the outlook for 2022.
Bank CEOs commended the central bank’s support to address the repercussions of the COVID-19 pandemic.
Last year, the Central Bank said it will begin a “gradual and well-calibrated withdrawal of the TESS scheme to avoid restricting credit supply and economic growth”.
“The TESS programme has proven its effectiveness in supporting the UAE financial system and economy throughout the pandemic. As the recovery is gaining momentum, the CBUAE has adjusted the TESS, replacing measures designed to mitigate the immediate negative effects of the pandemic with targeted steps to support the economic recovery,” the Central Bank governor had said then.
The improving broad-based indicators allowed the CBUAE and the banks to seamlessly complete Phase 1 of the TESS exit strategy by December 31, 2021 that allowed loan repayment deferrals supported by Dh50 billion interest-free liquidity support.
In the second phase of TESS exit strategy, banks will be eligible to access a collateralised Dh50 billion zero-cost liquidity facility until June 30, 2022.
The UAE introduced an economic stimulus worth Dh388 billion following the outbreak of COVID-19 that adversely impacted the cash flows and loan repayment capabilities of many borrowers.
The TESS helps banks provide temporary relief to companies and individuals affected by the COVID-19 pandemic and facilitates additional lending capacity through the relief of existing capital and liquidity buffers.