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An overview of economic stimulus packages in the United Arab Emirates in light of COVID-19

  • UAE


    In light of Coronavirus (COVID-19) being declared a pandemic by the World Health Organisation and its impact on global businesses worldwide, the UAE government, both at a federal and emirate level has been working with banks, regulatory organisations and economic free zones to support residents, and affected businesses.

    To date, the following economic measures have been implemented:

    1. on 12 March 2020, the Government of Dubai announced a AED1.5 billion economic stimulus package to enhance liquidity in light of the COVID-19 outbreak;
    2. on 14 March 2020, the UAE Central Bank (UAECB) launched the Targeted Economic Support Scheme (TESS);
    3. on 16 March 2020, the Abu Dhabi Executive Council launched 16 initiatives to support businesses and the community;
    4. on 29 March 2020, Dubai’s Free Zone Council launched a five point stimulus package.

    Each of the above will be explained separately below.

    1. Government of Dubai stimulus package

    Launched under the directives of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the stimulus plan contains 15 initiatives, which aim to reduce costs for the business sector and Dubai residents over the next three months

    Significant highlights include the:

    (i) refund of 1% of the customs duty imposed on imported goods sold locally in the UAE markets which are subject to the customs duty rate of 5% and have been processed under an import declaration between 15 March 2020 and 30 June 2020;

    (ii) cancellation of the AED 50,000 bank guarantee or cash requirement in order to undertake customs clearance activities;

    (iii) 90 percent reduction of fees imposed on submission of customs documents;

    (iv) exemption to traditional wooden commercial vessels registered in the country from mooring service fees for arrival and departure, and direct and indirect loading fees at Dubai and Hamriyah Ports;

    (v) ability to renew commercial licenses without the mandatory renewal of lease contracts;

    (vi) reduction of municipality fees imposed on sales at hotels from 7 percent to 3.5 percent;

    (vii) reduction in water and electricity bills by 10 percent; and

    The above list is not exhaustive, and except for (i), (ii) and (iv) may remain subject to implementation by each relevant ministry. 

    2.    UAECB’s TESS

    The purpose of TESS is to facilitate provision of temporary relief from the payments of principal and interest on outstanding loans for all affected private sector companies and retail companies in the UAE. TESS comprises of collateralised zero cost loans to banks in the UAE totalling AED 50 billion and AED 50 billion freed up from the UAECB’s capital buffers.

    This should translate into increased liquidity in the UAE and wider region, benefitting small and medium-sized enterprises which make up around 98 per cent of businesses in the UAE, representing over 60 per cent of the UAE’s gross domestic product.

    As a result of TESS, banks will be allowed to:

    (i) tap into a maximum of 60 percent of the capital conservation buffer, or 100 percent of their additional capital buffer for systemic importance, if the bank is deemed as systemically important by the UAECB;

    (ii) reduce the amount of capital banks have to hold for their loans to SMEs by 15 to 25 percent;

    (iii) avail of the relaxation in prudential limits i.e. banks will be allowed to have 30% exposure to the real estate sector, but may be required to hold more capital; and

    (iv) avail of the waiver of UAECB fees which it charges for the payment services provided to banks operating in the UAE.

    3.    Abu Dhabi Executive Council

    According to news reports, Abu Dhabi Executive Council announced 15 initiatives focused on supporting SME’s and easing the availability of loans to local companies. Some of the key initiatives include:

    1. the allocation of AED 3 billion to the SME credit guarantee scheme to stimulate financing by local banks;
    2. the suspension of individual or commercial real estate registration fees until the end of this year;
    3. the suspension of bid bonds and exempting start-ups from performance guarantees for projects up to AED 50 million;
    4. the settlement of all approved government payables and invoices within 15 working days;
    5. the suspension of tourism and municipality fees for the tourism and entertainment sectors until the end of this year;
    6. a rebate of up to 20 percent on rental values for restaurants, tourism and entertainment sectors; and
    7. no toll gate tariffs for all vehicles the end of this year.

    4. Dubai Freezone Council

    In coordination with the Dubai Free Zones Council, each of Dubai Silicon Oasis Authority, Dubai Airport Free Zone Authority, Jebel Ali Free Zone, Dubai World Trade Centre, Dubai International Financial Centre, Dubai Development Authority, Dubai South, Meydan City Corporation, and Dubai Multi Commodities Centre have committed to:

    (i) postpone rent payments for a period of 6 months;

    (ii) refund security deposits and guarantees;

    (iii) facilitate instalments for payments due to the applicable authority;

    (iv) cancel certain fines for companies and individuals; and

    (v) allow temporary contracts that allow the free movement of labour between companies operating in the free zones.

    It is believed that such a measure will support businesses incorporated in these free zones by reducing costs and maintain sustainable operations.


    Loans backed by Government Guarantees

    Additional Funding

    Loan Repayment Deferral



    No announcement to date

    AED 50 billion in collateralised zero cost loans to banks and AED 50 billion freed up from the UAECB’s capital buffers

    UAECB has directed the banks and finance companies to offer payment deferral relief for a period up to 6 months on instalment of loans/financing (principal and/or interest/profit) to their respective private sector corporates, SMEs and individuals affected by COVID-19.

    The maturity of these loans/financing may be extended by the period of the relief and repayment schedules to resume as normal following the expiration of the temporary relief period.


    There are wider policies that have been implemented by the Government of Dubai, the Government of Abu Dhabi and certain free zones in Dubai, aimed at reducing the costs incurred by residents and SME(s).

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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