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Dubai Economic Council hold 10th meeting

Mar 9, 2009 - 01:26 -

WAM DUBAI, Mar. 8th, 2009: Chairman and members of the Dubai Economic Council (DEC) today hailed the efforts of the Central Bank of the United Arab Emirates (UAECB) and the Federal Government to further bolster the position of the country's economy to face the consequences of the current global financial crisis.

Chairman of DED Jum'a Al-Majed hailed the role played by the UAECB through providing an AED 50 billion facility to boost liquidity.

Al-Majed further noted the Central Bank's subscription to the first tranche (50%) of Government of Dubai's $20 billion bond program.

This step, he said, is a significant link in a series of initiatives and policies by the government to preserve the growth of the national economy.

Al-Majed's remarks came at the tenth meeting of the Dubai Economic Council which was held today at the premises of the Dubai Chamber of Commerce and Industry.

Present at the meeting were, Governor of the UAECB Sultan Al-Suwaidi, Director General of the Ministry of Economy Mohammed Abdul Aziz Al-Shehhi and Chairman of the Dubai Department of Finance Nasser Hassan Al-Sheikh.

For his part, Al-Suwaidi outlined the position of the UAE economy highlighting its fundamentals noting that banks in particular are linked to the local economic activity which is in turn linked to the global economic activity.

He said when the Central Bank decision to keep the UAE dirham's peg to the US dollar coincided with a credit crisis in the USA and the rest of the world. The crisis, he added, prompted foreign investors to withdraw their "hot money" and deposits from UAE local banks and transfer them to overseas destinations creating a sudden shortage of liquidity at the banks and led to an AED 110 billion gap between loans and stable deposits.

Al-Suwaidi further predicted that all western economies will face recession during the current year (2009).

He urged UAE businesses to be cautious and adapt their plans for less income due to the slashed global economic growth outlook.

"The UAE Central Bank has now over AED 50 billions because of the stimulus package and the economic stability." "The current situation requires a stimulus plan for banks and the economy in view of this 'gap' which could be bridged in collaboration with the Ministry of Finance to boost UAE local banks' blankets so that they would receive again deposits from encouraged global markets", stressed Al-Suwaidi.

"Accounting for 6.9% of the country's Gross Domestic Product (GDP), the UAE stimulus package is relatively the world's highest", he added, calling for solutions by the Ministry of Economy for real economic sectors.

For his part, Al-Shehhi said "the impact of the global financial crisis on the UAE economy could not be precisely estimated and it is most visible in the county's stock markets, construction sector as well as in the decreasing of the inbound flow of foreign investments, compared to previous years." WAM/MMYS