Enhanced Public Debt Strategy Bolsters Investor Trust, Distinct from Budget Funding Mechanisms: Ministry of Finance (UAE)
Going Local for Financial Stability: UAE's Debt Strategy
In the heart of Dubai, Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, shed some light on the UAE's debt strategy during the second Financial Media Forum. Al Khoori emphasized that recent bond issuances, including UAE Dirham and US Dollar-denominated instruments, are not linked to budget financing but part of a broader plan to build a robust domestic yield curve and bolster the country's long-term financial infrastructure.
Speaking with confidence, Al Khoori explained that this approach ensures fiscal stability and policy sustainability. He made it clear that none of the funds raised through these bond issuances have been used to support the general budget.
Concerns about the fluctuating global oil prices were addressed, with Al Khoori dismissing recent volatility as temporary. He pointed out that prices have since settled back to their early-year levels, promiseing that the UAE is well-prepared to manage such challenges through thoughtful financial reserve allocations.
This proactive fiscal management strategy has allowed the UAE to maintain a balanced budget and post consistent surpluses in recent periods. Going forward, Al Khoori confirmed that all approved dollar-denominated bond issuances have been executed, with any new offerings to be announced following the required legislative processes.
The UAE's long-term public debt strategy centers around developing a robust domestic debt market primarily through increased issuance of local currency debt instruments like treasury bonds and sukuk. The goal is to create a reliable domestic yield curve that not only broadens the investor base but also supports the growth of financial markets by providing benchmarks for other fixed-income instruments. By 2025, the UAE plans to issue around $18 billion in local currency debt, reducing exposure to external market volatility and enhancing fiscal resilience. This strategic shift fosters a stable financial environment that supports sustainable economic growth and fiscal stability. [Source: Emirates News Agency]
[1] Reuters: "UAE dips into local debt market as global capital markets cool," March 18, 2022.[2] The National: "UAE planning 66.1bn dirham issuance of local currency debt bonds in 2025," August 13, 2022.[3] Gulf News: "UAE's local bonds market key to financial diversification," April 24, 2022.[4] Arab Finance: "UAE's local currency bond market: What lies ahead?" July 11, 2022.[5] Bloomberg: "UAE Central Bank Sees Inflation at 2.7%, Liquidity at Adequate Levels," March 22, 2022.
- The UAE's long-term public debt strategy includes a significant emphasis on developing a robust domestic debt market by increasing the issuance of local currency debt instruments, such as treasury bonds and sukuk.
- By 2025, the UAE aims to issue approximately $18 billion in local currency debt, which is expected to reduce exposure to external market volatility and enhance fiscal resilience.
- The development of a reliable domestic yield curve is not only intended to broaden the investor base but also to support the growth of financial markets by providing benchmarks for other fixed-income instruments.
- This strategic shift towards a stronger domestic debt market is part of the government's plan to foster a stable financial environment that supports sustainable economic growth and fiscal stability.
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