New borrowing in Abu Dhabi Emirati households falls to seven-year low

The Department of Economic Development said that the number of Emirati heads of households who took out a loan in the past three months was the lowest recorded since its survey began in 2009.

The number of Emirati heads of households who say they have taken on new debt in the past three months has fallen to a record low. Silvia Razgova / The National

The proportion of Emirati households in Abu Dhabi reporting that they are taking on new debt has fallen to the lowest levels in ­seven years.

According to a survey conducted by Abu Dhabi’s Department of Economic Development (DED) in June, just 10.3 per cent of the heads of Emirati households questioned said that they had taken out loans during the previous three months.

DED said that the figure was the lowest recorded since its survey began in 2009. Two years ago the DED reported that the figure stood at 28 per cent.

The department reported that 86.1 per cent of household heads surveyed in June indicated that they had not resorted to borrowing at all during the previous three months.

However, it added that the figures reflected only the proportion of household heads with loans and did not include debt taken out by other household members or debts taken out more than three months before the survey was conducted.

The DED attributed the drop to government initiatives helping nationals tackle high household debt.

“The decline in the percentage of borrowers of citizen household heads reflects the continuing positive impact of the efforts and initiatives aimed at raising the citizens’ awareness and rat­ion­alising their use of loans,” the DED said in a statement.

More than a third of respondents who had taken out loans (37.2 per cent) said that they had used the money to buy a new car. Another 30 per cent said that they had used the money to buy a family home.

The DED added that on average during the period, households spent about Dh25,488 a month in June, up from Dh22,236 a month in February. DED put the increase down to the fact that Ramadan fell in June this year.

Last month Obaid Al Tayer, the Minister of State for Financial Affairs, said that the Government is working on a new personal insolvency law that would apply to individuals.

A Central Bank survey for the third quarter showed that UAE banks were less willing to lend to businesses and individuals, while at the same time borrowers, especially owners of small businesses and expats, had become less keen to tap debt at a time when uncertainty about the ­future growth of the economy intensifies.

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