Policymakers across the Middle Eats region are acting as many of the economies in the region are at risk of paralysis/Bloombergby Bloomberg
Three of the biggest Arab economies have pledged almost $47 billion in stimulus to limit the economic damage of the COVID-19 outbreak, joining a global effort meant to soothe markets and salvage growth.
Saudi Arabia unveiled a SAR 50 billion ($13.3 billion) package to support private businesses, soon after its counterpart, the UAE announced an AED 100 billion ($27.2 billion) programme to assist its lenders. Egypt also said that it will allocate EGP 100 billion ($6.4 billion) to combat the coronavirus.
Policymakers across the Middle Eats region are acting as many of the economies in the region are at risk of paralysis, with most countries shutting tourist attractions, closing schools and universities, and limiting public events. The UAE also stopped issuing visas and halted flights to Iraq, Lebanon, Syria, and Turkey.
Compounding the disruptions to trade and tourism from the coronavirus, the crash in oil prices is also crippling the economies in the energy-rich Arabian Gulf.
Days of panic last week prompted unprecedented joined-up fiscal and monetary action by the UK, a package of targeted aid by the European Central Bank, stimulus from the People’s Bank of China, an easing pledge from the Bank of Japan and more firefighting by the US Federal Reserve.
The UAE’s Targeted Economic Support Scheme includes an AED 50 billion aid package for banks in the country through collateralized, zero-interest loans. Banks will also be allowed to free up capital buffers, which will make another AED 50 billion in liquidity available to lenders.
UAE's central bank stated that UAE lenders are adequately capitalised and banks maintain significant voluntary capital buffers, adding that the purpose of the targeted scheme is to facilitate the provision of temporary relief from the payments of principal and interest on outstanding loans for all affected private sector companies and retail customers in the UAE.
Saudi Arabian Monetary Authority said that it’s preparing funding to support private businesses, which includes SAR 30 billion available to banks and financing companies in return for deferring SMEs’ loans.
The Saudi regulator added that the Kingdom’s banking sector is still seeing good performance indicators.
The Central Bank of the UAE reiterated the long-standing peg of the country’s currency to the US dollar, saying that the oil-rich nation’s ample reserves of AED 405 billion as of 10 March 2020 are adequate to safeguard the stability of the national currency.
Days earlier, Iran asked the International Monetary Fund for $5 billion to help it manage the outbreak. Iran is the third-worst hit country after China and Italy.