The Central Bank Governor yesterday called for more control over public and private purse strings as the man responsible for overseeing the US$24.9 billion (Dh91.45bn) debt restructuring of one of the country's biggest conglomerates stepped down.
Sultan al Suwaidi stressed the need for future debt issues to be managed centrally.
"Ideally, everything should be controlled by the federal debt management office," he said. "We have to manage these initiatives so we will not have to deal with issues in the future."
Future credit expansion is likely to be more closely controlled, he said, with regulations in the pipeline intended to cap the credit portfolio of banks once they reach a certain limit. His comments came on the same day it emerged that Aidan Birkett, the architect of Dubai World's debt restructuring process, would leave his post today after successfully completing his work. Last month, the conglomerate announced it had reached an agreement with almost all of its bank creditors.
Dubai World was one of the biggest borrowers during the economic boom years. Last month, there was a pick-up in capital debt market activity, with bond sales by the Dubai Government and Emaar Properties. In an effort to improve debt oversight, the Government is setting up a federal debt management office to co-ordinate the raising of debt for government-related entities. The UAE is using the slowdown in growth that the global financial crisis has triggered as an opportunity to rebalance its economy and better control its debt profile.
"Our economy has come down to a level that's become very competitive as values have come down," Mr al Suwaidi said during the ACT Middle East Annual Conference in Dubai. "I think we are in a stronger position to face any new financial crisis."
GDP growth was likely to pick up next year to register between 3 and 4 per cent, he said. The IMF last week upgraded its outlook for growth this year to 2.4 per cent.
Such growth is some way short of the peaks the economy reached before the downturn, when a plentiful supply of credit was poured into the property market, sending housing prices and inflation surging. Credit levels reached 44.1 per cent in 2008 before dropping to 4.1 per cent last year, Mr al Suwaidi said. Banks withdrew credit lines after the financial crisis deflated property prices, triggering a rise in non-performing loans.
It was "wrong" for banks to both raise their credit portfolios to the peaks of 2005-2008 and to slow credit growth to the present low levels, he said. "We believe we need to issue new regulations to slow down the credit portfolio growth when it reaches a certain rate so we have space to grow at a higher rate at the same time," he said. Special technical teams were working on new regulations to make it easier for individuals to take out mortgage loans, he said.
As banks prepare to release third-quarter earnings, Mr al Suwaidi said guidance would be issued for lenders to address their exposure to Dubai World, with the framework based on guidelines produced by audit professionals. Several banks are expected to use the third quarter to take write-downs on their exposure to Dubai World. Contrary to some media reports, Mr al Suwaidi said the Central Bank had not taken action to freeze bank accounts in line with UN Security Council resolutions against Iran.
"We give banks free hand to implement Security Council resolutions and to protect themselves," he said.
tarnold@thenational.ae
SERIE A FIXTURES
Friday (UAE kick-off times)
Sassuolo v Bologna (11.45pm)
Saturday
Brescia v Torino (6pm)
Inter Milan v Verona (9pm)
Napoli v Genoa (11.45pm)
Sunday
Cagliari v Verona (3.30pm)
Udinese v SPAL (6pm)
Sampdoria v Atalanta (6pm)
Lazio v Lecce (6pm)
Parma v Roma (9pm)
Juventus v Milan (11.45pm)
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Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
The biog
Nickname: Mama Nadia to children, staff and parents
Education: Bachelors degree in English Literature with Social work from UAE University
As a child: Kept sweets on the window sill for workers, set aside money to pay for education of needy families
Holidays: Spends most of her days off at Senses often with her family who describe the centre as part of their life too
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FIGHT CARD
Welterweight Mostafa Radi (PAL) v Tohir Zhuraev (TJK)
Catchweight 75kg Leandro Martins (BRA) v Anas Siraj Mounir (MAR)
Flyweight Corinne Laframboise (CAN) v Manon Fiorot (FRA)
Featherweight Ahmed Al Darmaki (UAE) v Bogdan Kirilenko (UZB)
Lightweight Izzedine Al Derabani (JOR) v Atabek Abdimitalipov (KYG)
Featherweight Yousef Al Housani (UAE) v Mohamed Arsharq Ali (SLA)
Catchweight 69kg Jung Han-gook (KOR) v Elias Boudegzdame (ALG)
Catchweight 71kg Usman Nurmagomedov (RUS) v Jerry Kvarnstrom (FIN)
Featherweight title Lee Do-gyeom (KOR) v Alexandru Chitoran (ROU)
Lightweight title Bruno Machado (BRA) v Mike Santiago (USA)
Killing of Qassem Suleimani
pakistan Test squad
Azhar Ali (capt), Shan Masood, Abid Ali, Imam-ul-Haq, Asad Shafiq, Babar Azam, Fawad Alam, Haris Sohail, Imran Khan, Kashif Bhatti, Mohammad Rizwan (wk), Naseem Shah, Shaheen Shah Afridi, Mohammad Abbas, Yasir Shah, Usman Shinwari
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Name: Hassan Mohsen Elhais
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
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Scores in brief:
- New Medical Centre 129-5 in 17 overs bt Zayed Cricket Academy 125-6 in 20 overs.
- William Hare Abu Dhabi Gymkhana 188-8 in 20 overs bt One Stop Tourism 184-8 in 20 overs
- Alubond Tigers 138-7 in 20 overs bt United Bank Limited 132-7 in 20 overs
- Multiplex 142-6 in 17 overs bt Xconcepts Automobili 140 all out in 20 overs