By: Mahmoud Gamal
Dubai – Mubasher: The UAE’s issuance of a new public debt law is a historic milestone, an economist told Mubasher, noting that the law would bolster international investors’ confidence in the country.
The UAE may even offer a secondary market specialised in the trading of public debt, he said.
On Saturday, UAE President Sheikh Khalifa bin Zayed Al Nahyan issued the Federal Decretal Law No. (9) of 2018 on public debt, noting that it would enable the federal government to issue sovereign bonds and support the banking’s sector to meet international liquidity rules as soon as they are issued.
Basel III
The new law will achieve many of the UAE’s objectives, chief among them is supporting banks’ capital, enabling them to better comply with Basel III regulations and requirements, commented Waddah Al-Taha, member of the National Advisory Board of Chartered Institute for Securities & Investments (CISI).
Basel III requirements are those pertaining to banks’ liquidity within a country.
The newly-issued law will support the UAE’s legislative infrastructure, the analyst told Mubasher, noting that it would also offer “flexibility” in the issuance of public debt whether in the local currency, the dirham, or foreign currency and for different maturity dates.
These varying options will benefit a wide base of companies and economic sectors, Al Taha highlighted.
The law also allows government bodies in the UAE to launch a primary or secondary market for trading public debt, the analyst noted.
Government-issued debt would have strong credit ratings similar to that of the UAE government itself and would have limited risk, which in turn would attract and bolster investor confidence in the region in general and in the UAE in particular, Al-Taha commented.
The issuance of sovereign debt will boost the banking sector’s strength, the analyst told Mubasher, citing recent data.
The UAE’s banking sector’s assets exceeded AED 2.77 trillion in August, data released by the Central Bank of the UAE showed.
Translated by: Nada Adel Sobhi
