The Government has entered the second phase of its plan to protect the country's economy from the effects of the global economic crisis, according to Sultan al Mansouri, the Minister of Economy. "We are taking things in stages. The first stage was understanding the size of the need for a liquidity injection into the banking system," he said yesterday. "The second phase is to evaluate our performance in terms of banking, in terms of trade, in terms of the economy as a whole, in the first quarter of 2009." The ministry has set up an emergency financial committee which meets weekly and "is monitoring all the economic sectors of the UAE", he said. "It is monitoring the liquidity of the banks in terms of their status in general, their capital adequacy and many other things." The committee has already presided over the planned distribution of up to Dh120 billion (US$32.67bn) to banks, Dh50bn of which has already been given. Mr al Mansouri is also the head of a committee responsible for co-ordinating the restructuring of Dubai's troubled home finance providers, Amlak Finance and Tamweel. The committee recently submitted a series of proposals on how the two companies could deal with their problems, which could include a merger. The ministry is working with the Central Bank "to address any issues that may arise as we go on", he said. Sultan al Suwaidi, the Central Bank Governor, recently said he was working in conjunction with the Ministry of Economy and the Ministry of Finance on ways to protect the national economy, similar to those put in place in the West. "We also do not have all the answers in our hands now because a lot of other things are there in this world and you see it in the US, in the UK, you see it everywhere," Mr al Mansouri said. "You have to look at trade, you have to look at re-exports, you have to look at tourism, you have to look at so many other sectors that are being affected by this. And with that in mind, each one of them now has woken up to this situation. It's not sit and watch anymore. You have to act, you have to react to this kind of situation, to find solutions." Government officials have said they expect the economy to slow, possibly even contract, this year. The financial sector has been particularly hard hit and has received Government aid. With oil prices projected to remain at depressed levels in the near term and property prices expected to sink further, many economists are warning of further shocks to the economy. In February, the Central Bank lent $10bn to the Dubai Government, which will soon be distributed to cash-starved companies. Abu Dhabi has also injected Dh16bn into its banks to shore up their balance sheets and lending capability. tpantin@thenational.ae
