Abu Dhabi: The Frontline Heroes Office has praised the positive and effective role of the Central Bank of the United Arab Emirates, and its initiatives, in sustaining the UAE economy during the COVID-19 pandemic.
“The Central Bank of the United Arab Emirates stands out as one of the most essential frontline institutions in the country. The Central Bank demonstrated true leadership in protecting the UAE’s financial infrastructure and banking system,” said Sheikh Sultan bin Tahnoon Al Nahyan, chairman of the board of the Frontline Heroes Office said.
The chairman said swift action taken by the Central Bank had helped protect lives, and kept in business service providers in healthcare and other fields. “Look at the national economies around the world that have suffered most over the last eight months. The greatest threat came from an inability to support and sustain liquidity and capital preservation in the banking system that directly impacted multiple facets of their national economies. Banks stopped providing loans, companies stopped paying vendors to protect working capital, and global supply chains froze, locking up trillions of dollars. This resulted in mass bankruptcies and the loss of millions of jobs,” Al Nahyan said.
Backbone of the UAE economy
“Our financial institutions are the backbone of the UAE economy. The Central Bank is committed to effectively relieving the pressure they face, allowing them to continue their critical role of providing financial relief and access to essential funding for businesses and households that fuel our national economic growth and prosperity, immediately and for long-term well-being,” said Abdulhamid M. Saeed Alahmadi, Central Bank Governor.
“It is important to look at not only the actions taken by the Central Bank but also the direct impact those actions have had on thousands of companies essential to the long-term economic health of the UAE. We must recognise the incredible impact the Central Bank has had on hundreds of thousands of individuals and families affected by the pandemic. The immediate response by the Central Bank united and protected UAE financial institutions, enabling our banks to directly provide relief to businesses big and small across the UAE. It allowed them to preserve capital, maintain liquidity and keep money flowing across national supply chains,” Al Nahyan added.
In March, the Central Bank introduced the Dh100 billion Targeted Economic Support Scheme (TESS), strategically engineered to ease the liquidity challenges of UAE banks. In early April, Alahmadi, the newly appointed Central Bank Governor announced that the aggregate value of TESS and all capital and liquidity measures taken by the bank had reached Dh256 billion.
The innovative and comprehensive initiatives, presented by The Central Bank ensure the protection of capital, and well as maintenance of the minimum requirements that banks need to conserve, while allowing them to defer payments on capital and loans interests.
These Central Bank initiatives freed up capital to inject into the economy through loans to companies as well as individuals affected by the pandemic. This essential working capital enabled otherwise strong, healthy companies to stay in business, maintain payroll, preserve jobs, pay local vendors, and effectively keep the UAE economy moving forward.
Alahmadi explained that the benefits of the scheme were far-reaching. “By early October 2020, UAE banks had accessed in excess of 87 per cent of allocated TESS funds, directly impacting more than 1,500 companies and 10,000 small and medium enterprises. The TESS program also directly supported 300,000 distressed UAE residents who lost their jobs due to COVID-19 or had been on extended unpaid leave. It is difficult to measure the full immediate and long-term impact the Central Bank initiatives have had and will continue to have in the future. There is no question many companies across the UAE would not be in business today were our banks not empowered to provide support. Countless jobs would have been lost, exposing families across the country to enormous financial and health risks,” he said.
The Frontline Heroes Office was founded in July 2020 to recognise, champion and support frontline professionals who take exceptional measures to protect the health, safety, well-being and future opportunity of our nation and its people in times of our greatest need.