Abu Dhabi – Mubasher: UAE President Sheikh Khalifa bin Zayed Al Nahyan has issued Federal Decretal Law No. (9) of 2018 on public debt.
The purpose of this new law is to enable the federal government to issue sovereign bonds as well as help the banking sector meet international liquidity rules as soon as they are issued, the government said in a statement.
Banks operating in the UAE will also be able to purchase government bonds in dirhams or foreign currencies, the government noted, stressing that this would assist banks in complying with Basel III requirements.
The issuance of sovereign bonds will bolster the Central Bank of the UAE’s role in managing the banking system’s liquidity, while the issuance of government debt securities will “help benchmark the UAE Dirham yield curve and thereby deepening the local financial market for financing of companies operating in the state,” the statement, released Saturday, explained.
UAE finance minister and deputy ruler of Dubai Sheikh Hamdan bin Rashid Al Maktoum stated that the law would “support the establishment of a government bond market through which public debt instruments can be traded in UAE financial markets, and long-term bonds can be issued to contribute to alternative sources of funding for federal government projects.”
He went on to say that the law would result in “substantial returns for the state,” as it will contribute to boosting sovereign debt management and development based on the best international practices.
The law will also positively affect the UAE’s upgrade in terms of “macroeconomic management and better coordination between fiscal and monetary authorities, reducing the cost of borrowing and boosting the state's credit rating," bin Hamdan added.
Furthermore, the law would also enhance the UAE’s competitive ranking, investor confidence in the national economy, and raise transparency in the management of public finances, which in turn would result in “greater opportunities for the national economy and better integration into the global economy,” the top official concluded.
