CBUAE’s Dh1 trillion liquidity support — a gamechanger, if it reaches the ground
UAE businesses face pressure across multiple due to geo-political developments
As a UAE based entrepreneur for 30+ years, my takeaway from every volatile economic cycle is: Liquidity support strengthens the system however discipline sustains it.
Due to geo-political developments in the region, UAE businesses face pressure across multiple fronts:
Supply chain disruptions impacting availability and timelines
Rising input & logistics costs
Slower collections & extended credit cycles
Increasing delays in payments across the ecosystem
The above scenarios cause a ripple effect resulting in working capital getting locked due to slowdown in cash movement and not because of lack in demand.
Financial Institution Resilience Package: A Strong Policy Response
CBUAE has powered through with timely intervention by introducing a Financial Institution Resilience Package of over Dh1 trillion, to ensure:
Continued lending
Stable credit environment
Availability of trade finance
Flexibility for stressed businesses
What is the ground reality?
Through recent discussions with UAE banks a few realities emerging are:
Support is focused on genuinely impacted businesses
Cases with pre-existing stress (pre-Feb 28) may not qualify
Many affected businesses are actively approaching banks
Banks have adequate liquidity, so this package is a buffer than for immediate deployment
A similar approach implemented during COVID proved effective
Remember, liquidity is available, but access will be selective and case driven.
The Real Bottleneck
I can vouch that liquidity at the top does not translate into circulation at the ground level.
Payments are being delayed
Cash is being conserved excessively
Commitments are not being honoured
The above points trigger a vicious cycle where -
SMEs face stress
Suppliers get impacted
Growth slows
From an auditor’s lens - Banks have stepped up. It is time businesses do the same.
Recommended best practices are:
Honour payment timelines
Avoid unnecessary delays
Maintain trust in the ecosystem
Support partners just as banks support you
The UAE has demonstrated - Decisive leadership. Strong institutions & Timely action but the success of the resilience package rests on the principle: Liquidity must circulate and not stagnate within the ecosystem. Policy support backed by payment discipline will drive resilience in the UAE’s business landscape.
Authored by James Mathew – CEO & Managing Partner, UHY James
