A long-awaited strategy on how the UAE will issue federal bonds will be submitted to the Cabinet for approval within two weeks, a senior Ministry of Finance official says.
The policy will act as a forerunner before the approval of a public debt law, paving the way for the country's first federal government bonds.
Borrowing would be managed by a federal debt office being set up by the ministry.
"The strategy is ready and we are in the process of sending it to the cabinet for approval," said Younis Al Khouri, the director general of the Ministry of Finance.
"Now we are just waiting for Central Bank comments. In the next two weeks we will send it to the Cabinet."
Launching systems for trading securities and assessing investor demand are among the technical tasks required as part of the strategy. But its formation has been delayed, with officials initially hoping to have it agreed last year.
In recent years, the Government has become keen to start selling bonds to provide cash for government departments and provide a benchmark for private firms planning bond sales. In the past, Abu Dhabi, Dubai, Ras Al Khaimah and other emirates have made sales to international investors but the federal Government has yet to do so.
The long-awaited law is still awaiting final presidential sign-off after the Federal National Council approved the legislation in December 2010.
"Sometimes we have to go by the regulations and the process itself takes time," Mr Al Khouri said when asked when the law was likely to finally be passed.
In an attempt to better regulate government debt levels, plans were unveiled in 2009 for the public debt management office, which will oversee all sovereign securities including bond issuances.
"We are building the ground and making the office ready," said Mr Al Khouri. "We cannot issue a bond without the law, but we can proceed on establishing the office."
The office is also intended to help boost investor transparency about public debt, while consolidating it at a central level. Levels of debt loads are at present uneven across the emirates.
Dubai has borrowed more heavily than the other emirates in recent years. Its debt-leveraged strategy unravelled when the global financial crisis struck and left government-linked firms needing to restructure debts.
It is still facing a challenge getting to grips with a maturing debt pile estimated at US$14 billion (Dh51.42bn) this year.
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