UAE expects to ratify federal debt law this year, official says
The United Arab Emirates is likely to ratify a law by the end of this year that will allow the federal government to issue bonds, after which the UAE would issue about 80 billion to 100 billion dirhams ($22 billion to $27 billion) worth of debt, a senior finance ministry official said.
“I expect the law to be ratified in six to nine months,” Younis al-Khouri, under-secretary at the ministry, told Al Arabiya television on Tuesday.
The seven individual emirates in the UAE issue bonds, but the federal government has not done so in the absence of such a law, which has been in preparation for years.
However, a plunge in oil prices since mid-2014 has pushed state finances into deficit. Issuing bonds at a federal level would give the UAE another fund-raising option and could reduce pressure on the individual emirates to draw down their assets.
Fitch Ratings expects the largest emirate, Abu Dhabi, to cover part of its deficits in 2016 and 2017 by drawing down assets at its sovereign wealth fund, the Abu Dhabi Investment Authority. It predicted ADIA’s assets would fall to $475 billion this year from an estimated $502 billion at end-2014.
Khouri said on Tuesday that after the law was ratified by the UAE’s national assembly and rulers, the central bank would be responsible for issuing the dirham-denominated bonds.
He said the projected issuance of 80 billion to 100 billion dirhams was smaller than initial expectations. He did not say when the debt might be sold.
Reuters – Reporting by Sylvia Westall and Yara Bayoumy; Writing by Andrew Torchia, editing by Larry King