News

GCC states announce economic stimulus packages

CoronavirusAnalysts and rating agencies have reacted positively to a series of economic stimulus packages announced by Gulf states to offset the effect of the coronavirus. The Saudi Arabian Monetary Authority (SAMA) unveiled a £13.3 billion fund on March 15 to support the private sector and small and medium enterprises (SMEs) and allow for deferred payments and concessional loans. Meanwhile Bahrain’s central bank announced a series of initiatives worth $11.3 billion to support its economy and to maintain liquidity in the private sector. “These are extraordinary times that require extraordinary measures and as one team we can get through all the challenges,” said finance and national economy minister Shaikh Salman bin Khalifa Al Khalifa. And the UAE has introduced a $27.2 billion economic support scheme to limit market volatility. In addition, the Abu Dhabi Executive Council allocated $272 million to set up a market maker fund to maintain liquidity in the stock market. Rating agency Moody’s welcomed the measures, stating that they will limit UAE banks’ likely material asset quality deterioration from the coronavirus outbreak. “Although Moody’s still expects UAE banks’ asset quality to materially deteriorate amid the current difficult environment, the support scheme will mitigate the extent of the deterioration by keeping some borrowers' liquidity issues from becoming solvency issues,” stated the agency. “The funding scheme will also support banks’ liquidity by providing cheap funding to meet cash calls from affected borrowers,” added the report. © 2020 funds global mena

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