The approval of a new public debt strategy by the UAE's Federal Government will help to elevate the country's global competitiveness and improve macroeconomic management.
The strategy will stimulate the financial and banking sector in the Arab world's second-largest economy, provide alternative methods for financing federal government projects and help to establish a bond market in UAE dirhams, Sheikh Hamdan Bin Rashid Al Maktoum, deputy ruler of Dubai and minister of finance said in a statement on Monday.
“The strategy supports the UAE’s efforts to attain a competitive economy and enhance financial planning for the federal government,” Sheikh Hamdan said.
“It also helps lay the foundations for public debt operations management and achieve financial sustainability – by enhancing investor confidence in the national economy. This contributes to strengthening the country's standing in global competitiveness indices to be the best country in the world by the UAE Centennial 2071.”
The federal government on Sunday approved the new 2021-2023 debt strategy at a cabinet meeting chaired by vice president and ruler of Dubai Sheikh Mohammed Bin Rashid.
The goal of the strategy is to build a market for federal government debt securities denominated in UAE dirhams, and to "revitalise the financial and banking sector in the country", Sheikh Mohammed said in a series of tweets announcing decisions from the meeting.
The UAE government does not currently issue debt, but individual emirates do tap bond markets. However, the federal government has been putting the infrastructure in place to issue debt denominated in dirhams for the past two years.
A Public Debt Law allowing the issuance of federal bonds was passed in 2018 and last month the Central Bank of the UAE said it would begin issuing dirham-denominated securities known as M-Bills in January.