## IMF Staff Completes 2021 Article IV Mission to the United Arab Emirates

_IMF News, September 30, 2021_

## Source details

**Canonical URL:** [IMF Staff Completes 2021 Article IV Mission to the United Arab Emirates](https://www.imf.org/en/news/articles/2021/09/29/pr21279-uae-imf-staff-completes-2021-article-iv-mission)

## Other formats

- [Markdown version](/en/news/articles/2021/09/29/pr21279-uae-imf-staff-completes-2021-article-iv-mission/index.md)
- [Structured JSON version](/en/news/articles/2021/09/29/pr21279-uae-imf-staff-completes-2021-article-iv-mission/index.json)
- [Bundle manifest](/en/news/articles/2021/09/29/pr21279-uae-imf-staff-completes-2021-article-iv-mission/bundle-manifest.json)

## Bibliographic details
- Published: September 30, 2021

---

### Mission information and context
- IMF staff team led by Mr. Ali Al-Eyd held virtual discussions with the UAE authorities for the 2021 Article IV Consultation from September 14 - 28, 2021.
- End-of-Mission press release date: September 30, 2021.
- Statement conveys preliminary findings of IMF staff and does not necessarily represent the views of the IMF’s Executive Board.

### Recovery overview and near-term drivers
- The economic recovery has begun to gain momentum, helped by the UAE’s early and strong response to the Covid-19 pandemic, successful vaccination program, increased tourism, and activity related to the delayed Expo 2020.
- Vaccinations cover nearly 95 percent of UAE nationals and other residents with at least one dose.
- The delayed Expo 2020 is set to begin in October.

### Recent economic performance (2020) and 2021 outlook
- 2020 GDP contraction: estimated to have contracted by 6.1 percent.
  - Oil GDP decline in 2020: 6 percent.
  - Non-oil GDP decline in 2020: 6.2 percent.
- Drivers of 2020 weakness: dampened global demand, lower oil prices, and reduced oil production under the OPEC+ agreement, which weighed on fiscal and external balances.
- 2021 expectations:
  - A gradual recovery is expected in 2021, supported by health response, supportive macroeconomic policies, and rebound in tourism and Expo-related domestic activity.
  - Non-oil GDP growth is expected to exceed 3 percent in 2021.
  - Oil GDP will continue to grow with increased production.
  - Higher oil prices will lift the fiscal and external balances.

### Risks to the outlook
- Overall balance of risks is tilted towards the downside.
  - Key downside risk: resurgence of the pandemic.
- Upside risk: the UAE’s strong reform momentum provides an upside risk to growth.
- Uncertainty remains globally and in the UAE.

### Policy findings and recommendations
- Public health:
  - Protecting public health through continued strong vaccination and testing efforts for all nationals and residents remains the top priority.
- Macroeconomic policy:
  - The current macroeconomic policy mix remains appropriate.
  - Going forward, support measures should be increasingly targeted to viable sectors and firms and supporting people most in need.
  - New fiscal stimulus and structural reforms should be prioritized and sequenced to ensure efficiency and effectiveness, ensuring sustainable and inclusive growth outcomes.
- Structural reform priorities mentioned:
  - Attract highly skilled professionals.
  - Support private sector employment.
  - Increase trade and foreign investment.
  - Harness the benefits of technology.
- Fiscal framework and consolidation:
  - To deliver sustainable fiscal outcomes and intergenerational equity, a gradual, but marked, fiscal consolidation in the context of a credible medium-term fiscal framework is required.
  - Given the UAE’s decentralized fiscal structure, emirate-specific fiscal anchors should first be enhanced and then carefully coordinated to ensure a unified national fiscal stance.

### Financial sector observations and recommendations
- The swift and substantial policy response and proactive communication by the Central Bank of the United Arab Emirates have been critical throughout the crisis.
- Banking system:
  - Liquidity and capital in the banking system remain strong.
  - Corporate credit growth remains subdued.
  - Retail lending has picked-up.
  - Banks’ asset quality has weakened somewhat.
  - Further impact on banks’ balance sheets, including from the COVID-19 crisis, may still lie ahead.
- Recommendation: continued monitoring of risks to ensure financial stability and enhance resilience; ongoing efforts to strengthen macroprudential and regulatory frameworks should continue.

### AML/CFT and governance
- Major efforts have been undertaken to further enhance the AML/CFT regime, including under the guidance of the National AML/CFT Strategy and action plan, and should be continued.
- For successful implementation of the 50-year reform agenda, careful prioritization and sequencing of reforms, enhanced integration of strategies and policies at different levels of government, and productive collaboration across individual emirates are required.
- Ensuring timely collection and dissemination of economic data will buttress reform efforts.

### Institutional acknowledgements
- The IMF team expressed appreciation to the authorities and other stakeholders for open and fruitful discussions.

*IMF staff press release, September 30, 2021.*

---


## References

- [United Arab Emirates and the IMF](http://www.imf.org/external/country/ARE/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/09/29/pr21279-uae-imf-staff-completes-2021-article-iv-mission_