Governor of the Central Bank of the UAE HE Sultan Nasser Al Suwaidi, has reiterated that the World Financial Crisis is over when it comes to the financial part, but its repercussions are still clear on the property and investment sectors.
Al Suwaidi added at a press conference held here today at the UAE Central Bank's head office to announce the report of the executive council of the International Monetary Fund (IMF) discussed in Washington on Feb. 3, that the report commended the UAE Government's decision to inject Dh120 billion into the banks.
He added that the central bank has taken the decision to finance the local banks10 days before the government's decision was taken to ward off the repercussions of the global financial crunch on the UAE banking sector.
Al Suwaidi noted that the report highlighted the steps taken by the UAE government to expand in funding major and infrastructure projects due to their significant impact on the economic growth. He added that the report also appreciated the liberalise policies of the banking sector and low interest rates.
He pointed out that the injection of liquidity into the local banks has considerably helped the banks to continue their financing and crediting operations as the loans grew by 2.7 per cent in 2009, a good percentage in the light of global financial situation last year.
Al Suwaidi underlined that the IMF called in its report for boosting transparency and release of the financial statements to help in taking appropriate investment decisions for companies. The report also called for improving level of control and inspection on the banks through establishing exceptional inspection system to avoid emergency cases, which invite intervention of the central bank.
The top UAE Central bank official described the report as positive, adding that the resolutions mentioned in the report are positive and should be taken into account.
Al Suwaidi said the gap between deposits and loans is so huge in the banks to the extent that it could not be bridged soon, but would continue for sometime. He added that the local banks have bonds and sukuk touching Dh18 billion, while the loans and commodities reached Dh1.2 trillion. The percentage of the bonds and sukuk on the local is little.
He noted that the real estate sector was negatively affected by the repercussions of the global financial crunch and the growth in the non oil sectors was one per cent last year. Al Suwaidi forecasted that the economic growth would be tangible during 2011. - Emirates News Agency, WAM
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