Press Release No. 14/498

Press Release: IMF Staff Concludes Visit to the United Arab Emirates

November 5, 2014

An International Monetary Fund (IMF) mission led by Harald Finger visited the United Arab Emirates (UAE) during October 28-November 5 to review macroeconomic and financial developments. The mission met with H.E. Mubarak Al Mansoori, Governor of the Central Bank of United Arab Emirates; H.E. Obaid Humaid Al Tayer, Minister of State for Financial Affairs; H.E. Mohammed Al Shaibani, Director General of H.H. The Ruler’s Court of Dubai and CEO of the Investment Corporation of Dubai; H.E. Mohamed Al Hameli, Director General, Abu Dhabi Department of Finance; other senior government officials, and representatives from the business and financial community.

At the conclusion of the visit, Mr. Finger issued the following statement today in Dubai:

“Economic recovery has continued at a solid pace, supported by construction, logistics, and hospitality. Ongoing public projects in Abu Dhabi and continued strength in Dubai’s services sectors have continued to underpin growth. Growth in real hydrocarbon GDP has continued to moderate in the context of an amply supplied global oil market. Overall, GDP is projected to grow at around 4¼ percent this year, supported by ongoing strength in non-oil growth (around 5½ percent).

“Residential real estate prices in Dubai stabilized over the summer as sales volumes moderated. The slower momentum in the market is welcome news following a period in which prices had increased at a fast pace.

“Fiscal policy this year has continued to gradually unwind the large expansion that was put in place in the wake of the 2008/9 global financial crisis. The decline in oil prices by around 20 percent over the last three months, if sustained, could have a significant impact on oil revenue. The UAE has sovereign wealth fund buffers and a relatively lower fiscal breakeven price compared to other major oil producers, allowing it to continue on its path of gradual fiscal consolidation and thereby to minimize the drag on growth.

“Banking system developments have been broadly encouraging. Amid ample liquidity in the banking system, private sector credit has continued to strengthen. The banking system has remained well-capitalized and non-performing loans have continued to decline.

“Dubai’s government-related entities (GREs) have continued to improve their debt profiles. Following the completion of the major debt restructurings from the 2008/9 crisis, several GREs have begun making early repayments of upcoming maturities. While debt levels for some GREs continue to be significant, overall, stronger financial positions and lengthened maturity profiles have further reduced debt-related risks. Looking ahead, with Dubai GREs periodically announcing new large projects in real estate and hospitality, close coordination will be needed to ensure that the provision of new supply remains in line with reasonable demand projections.