By: Amr Adel
Dubai – Mubasher: The UAE’s finance ministry undersecretary said he expects the federal law for public debt to be issued by the end of the year.
This step will allow the UAE to issue sovereign debt instruments, Younis Haji Al Khoori said on Sunday.
The public debt law will allow the federal government to issue dirham-denominated bonds, while the Central Bank of the UAE will be able to issue short-term treasury bonds on behalf of the government.
UAE banks will also be able to make use of these debt instruments to meet liquidity requirements in accordance with the global banking regulations for Basel III.
The draft law offers a framework to establish a UAE government bond market and to trade public debt instruments in one or more of the UAE’s three financial markets. Moreover, the law specifies a ceiling that does not exceed 25% of gross domestic product (GDP) or AED 200 billion ($54.46 billion).
The government is hoping to issue debt instruments within a six-month time frame from the issuance and ratification of the law, the finance ministry undersecretary stated, noting that the limited deficit level means that the instruments will not be used to finance the general budget.
Al Khoori said that the federal government’s budget deficit isn’t major to the extent that it would require issuing debt instruments.
In November 2016, the UAE government approved a federal budget worth AED 48.7 billion ($13.3 billion) for 2017.
Federal debt will be used to manage liquidity in the banking sector alongside the Central Bank of the UAE.
The UAE’s financial markets are the Abu Dhabi Securities Exchange (ADX), the Dubai Financial Market (DFM) and Nasdaq Dubai.
By: Nada Adel Sobhi
