UAE economic growth outlook for next year positive, says Al Tayer

The outlook for economic growth in the UAE next year is positive, said Obaid Humaid Al Tayer, Minister of State for Financial Affairs. “Our economy is strong and our laws are sufficient to deal with the international financial crisis,” he told the Federal National Council. “We are ready to provide the banks with other funds in addition to the payments they have received if they want them. Currently liquidity is available and there is no liquidity crisis in the country. “The government took all suitable measures to make liquidity available in the market. The committee responsible consists of the ministries of finance and economy and the Central Bank has met 15 times so far. The government is ready to take more measures when necessary.” Al Tayer said the Ministry of Finance had imposed conditions on the release of payments to banks to end the liquidity crisis. “The banks should use the loans they receive to improve their liquidity and bridge any gaps they may have. The banks provide the Central Bank with a report on their financial situation every two weeks so that we can support them in case they need it.” He said the real estate sector had been affected by the global crisis, but added: “The laws and regulations of the Central Bank have not been violated by any bank. “The percentage set by the Central Bank for property finance is 20 per cent of a bank’s total loans, but the current property finance percentage averages 15.5 per cent. The Central Bank is able to control the practices of banks and our laws are good.” Al Tayer, when asked about the Central Bank’s role in combating investment fraud, said: “There are gaps in the 1989 law that established the Central Bank and this law is being modified. “The role of monitoring banks is assigned to the Central Bank. But there are other bodies that we look forward to working with in coming months, especially security bodies and federal and local bodies, to monitor investment companies that are launched on the internet. “This needs great effort and we work with the Telecommunications Regulatory Authority and economic departments, which take suitable measures against certain websites and have good plans for monitoring in the future.” Central Bank Governor Sultan Nasser Al Suwaidi, in a speech to the FNC, said the national economy was strong and stressed that the country’s banks did not have any financial problems. He reviewed the measures taken by the Central Bank to tackle bogus investment companies and stressed the significance of the amendment to the Central Bank establishment law. “The coming amendment is positive and handles important issues not covered by the current law.” Al Suwaidi said those engaged in investment fraud should face the proper penalties. “A very large number of brokers have not received the proper punishment – and they should be punished. Selling non-existent investments is a legal violation.” He said the Central Bank had seen cases where investors had put money into schemes offering high interest rates without knowing they were unlicensed. Al Suwaidi said the Central Bank had warned Nationals and expatriates against investing in such schemes. “We also co-ordinate with public prosecution offices, courts and the Ministry of Interior to expose bogus companies, and we have strong mechanisms to expose them.” He said legislation was important but the first line of defence lay with investors who should avoid depositing money with unlicensed bodies. Capital inflation exceeds national average Inflation in Abu Dhabi soared up to 11.6 per cent in 2007 to record the highest rate in the UAE and surpassed the country’s average, official figures showed yesterday. Dubai came second, with an inflation rate of 11.2 per cent while it stood at 10.3 per cent in Sharjah and 9.8 per cent in Ras Al-Khaimah, the Ministry of Economy said in a report on inflation in each of the emirates. The report put general inflation in the UAE at 11.1 per cent in 2007 compared with 9.2 per cent in 2006 and 6.5 per cent in 2006. The surge in Abu Dhabi’s inflation was a result of a sharp rise in rents by nearly 17.6 per cent in 2007 to record the highest rent growth in the UAE. Dubai came second, with an increase of 17.3 per cent, followed by Sharjah and Ras Al Khaimah, with a growth of 17.1 per cent each. The figures showed rents jumped by 18.5 per cent in the UAE last year. The ministry report did not give breakdown for other emirates. Abdel Hai Mohamad