Buzz Updates IMF Staff Concludes 2022 Article IV Mission to United Arab Emirates
Buzz Update IMF Staff Concludes 2022 Article IV Mission to United Arab Emirates
IMF Staff Concludes 2022 Article IV Mission to United Arab Emirates
November 21, 2022
End-of-mission press releases come with statements from IMF workforce conveying initial findings after a rustic consult with. The perspectives expressed on this commentary are the ones of IMF workforce and don’t essentially constitute the perspectives of the IMF Executive Board. Based at the initial findings of this undertaking, workforce will get ready a file which, matter to control approval, shall be offered to the IMF Executive Board for dialogue and choice.
<li>Near-term financial progress is robust, supported by way of a rebound in home job, whilst prime oil costs toughen prime surpluses within the fiscal and exterior balances. Inflationary pressures are anticipated to average step by step.
Going ahead, the full fiscal stance will have to stay wary, whilst brief cost-of-living toughen measures will have to proceed to be smartly centered to these maximum in want. Uncertainties associated with the ongoing tightening of world and home monetary stipulations underscore the significance of persevered shut tracking of economic steadiness
Reforms beneath the UAE 2050 technique should be pursued, with a focal point on assorted and inclusive progress, to make sure a balanced option to power transition and care for sturdy financial potentialities as a part of world efforts of decarbonization.
<strong>Abu Dhabi, UAE:</strong>
A crew of International Monetary Fund (IMF) workforce, led by way of Mr. Ali Al-Eyd, held discussions with the government of the United Arab Emirates for the 2022 Article IV session from 2 to 17 November 2022 At the tip of the undertaking, Mr. Al-Eyd issued the next commentary:
“Economic progress has been tough this 12 months, pushed by way of a robust rebound in tourism, development and Dubai World Expo-related job, in addition to upper oil manufacturing in step with the Dubai manufacturing agreements. Overall, GDP progress is predicted to succeed in over 6% in 2022, up from 3.8% in 2021. Inflation has risen with world traits and is predicted to moderate simply over 5% this Fiscal and exterior surpluses higher additional, taking advantage of upper oil costs in addition to the removing of brief COVID-related fiscal toughen to companies and families because the pandemic step by step waned. Heightened world uncertainty has led to bigger monetary inflows, contributing to speedy area worth progress in some segments.
"Looking forward, the UAE's financial outlook stays certain, supported by way of home job. We be expecting non-hydrocarbon progress of round 4% in 2023 and an acceleration within the medium time period as ongoing reforms are applied. Inflationary pressures are anticipated to step by step ease, significantly on account of tighter monetary stipulations.The additional construction of home capital markets, together with in the course of the issuance of native foreign money debt securities by way of the government, will even toughen the expansion.
“Nevertheless, the outlook is matter to vital exterior uncertainties, together with the affects of world financial and fiscal headwinds, geopolitical trends and lately introduced OPEC+ manufacturing cuts. However, emerging oil costs and Sound fiscal buffers assist mitigate dangers, whilst more potent reform efforts would pose upside dangers to medium-term progress.
“Given the macroeconomic outlook, near-term insurance policies will have to intention to make sure sustainable progress and care for monetary steadiness, whilst protective in opposition to inflationary results. In this regard, we welcome the focused on of brief fiscal toughen to probably the most liable to mitigate the affect of upper inflation, however observe the significance of keeping up a prudent total fiscal stance, supporting efforts to hose down inflation, and bolstering buffers to make sure medium-term sustainability.
“Banks have ok combination capital and considerable liquidity, and asset high quality has advanced relatively from pandemic-era peaks. Credit progress to the home personal sector has advanced. Real property worth trends and the predicted additional tightening of economic stipulations underline the significance of persevered shut tracking of economic steadiness. We commend the ongoing efforts of the Central Bank of the United Arab Emirates to improve the macroprudential framework and advertise the efficient control of non-performing loans.
“Major efforts were made inside the framework of the National AML/CFT Strategy and Action Plan to additional improve the regulatory regime to make sure its effectiveness, in step with enhanced supervision in step with the suggestions of the Financial Action Task Force and will have to be persevered.
“As regards the medium time period, we welcome the deliberate tax reforms, together with the deliberate creation of a company tax and the phasing out of royalty buildings for companies. These will have to be additional bolstered to underpin slow and growth-friendly fiscal consolidation within the context of a legitimate medium-term fiscal framework to care for fiscal sustainability. Improved and moderately coordinated emirate-specific fiscal anchors and laws would be sure that a unified nationwide fiscal place.
“Reforms beneath the UAE 2050 technique are welcome and will have to be pursued, with a focal point on financial diversification, to make sure a balanced power transition and robust long-term financial progress. Although the UAE has made vital development on local weather tasks, precedence will have to be given to low-carbon investments with the best financial importance and the best possible for decreasing emissions and depth. power. This shall be facilitated by way of primary ongoing investments in renewable power assets and paintings to expand a inexperienced taxonomy and mainstream inexperienced and sustainable finance.
Ongoing structural reforms, reminiscent of the ones aimed toward supporting personal sector employment and girls's participation within the hard work marketplace, expanding business and overseas funding, and harnessing some great benefits of generation and training , will give a contribution to making sure sustainable and inclusive progress. Strengthening cooperation between the other emirates, in particular within the assortment, sharing and dissemination of monetary knowledge, will improve those efforts.
"The IMF crew needs to precise its gratitude to the government and different stakeholders for the open and fruitful discussions."
<h5>IMF Communications Department</h5>