09
Apr 2020
The coronavirus pandemic has affected more than 200,000 people and has been spread in more than 145 counties in the world and is showing no indication whatsoever of slowing down. This pandemic has brought the whole world to a literal standstill as there are complete lockdowns of regions in the world to curb the spread of this deadly virus.
Here are some of the steps which the government of the United Arab Emirates has taken to rejuvenate the economy of the country:
1.Financial Stimulus Package
As the nations are going into lockdown, the various business industries have been severely hit, and the loss of life and property just keeps on increasing. To tackle this situation, UAE has announced a stimulus package for the various industries. The UAE Central Bank has announced a package of Dh100 Billion, which is roughly 27.4 billion dollars. This stimulus package will help in the generation of movement in the economy and will be a step in bringing the economy as it was before.
The governments of Dubai and Abu Dhabi have also taken the initiative and provided a stimulus package which will assist the businesses in the region. Government analysts are positive about the impact this grant will create. Both Dubai and Abu Dhabi government will provide incentives for a number of activities such as the development of travel and tourism, encouraging research and development, etc.
2.Providing Capital Buffers
Apart from the stimulus package, the central bank is also going to allow the smaller banks to free up Dh50 billion from the regulatory capital buffers. This move will help to provide a boost to the lending capacity of the banks, which will, in turn, help the flow of liquidity in the United Arab Emirates. It has also been decided that the central bank will have the provision to provide and advances loans of Dh50 Billions at Zero Cost.
The banks are also looking at providing economic relief services at the Small and Medium Enterprise (SME) level. At this level, banks could refrain from charging fees on the delay of payment
3.Targeted Economic Support Schemes
There is a consensus that the banks need to take steps to help restore fluidity in the economy. One of the most effective ways will be for banks to offer a payment holiday to the people who have been affected by this epidemic. One more alternative to looking into will be the ability to renegotiate the payments to be made to the bank.
One of the reasons cutting interest rates will not be a good option is that the people are not looking to lend money right now. Most of the clients do not want to borrow money because there are not many avenues to put their money into, and also the future is very uncertain.
4.Provisions made in the past
The current situation of the banks in the United Arab Emirates is pretty good. Due to the various decisions made in the past, the banks have the right amount of liquidity in them and are well-capitalized. The problem may start to arise only after three to four months.
The stress over the banks will be evident only after the third or fourth quarter. The most hit sectors will be the Travel and Tourism industry, Hospitality industry, Airline industry, Transportation and Logistics, etc.
With the current conditions in mind and the difficult times ahead, a business must have a proper and precise budget before starting the business activities. With the industries being hit by the global pandemic, there is a massive requirement for effectively and efficiently managing the amount dedicated to a particular business. If the budget is not adequately kept in mind, the business will have to face problems in the near future.
Services such as Accounting services and Auditing services, Tax related services, Bookkeeping services, Payroll services, and many other services are very important for a business. Only after the proper allocation of funds to the various activities can a business hope to achieve some profit, if you are looking for such a financial firm in the United Arab Emirates, then you must have a look into the services provided by Jaxa Chartered Accountants.
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