The Central Bank of the UAE (CBUAE) has extended the economic stimulus package until the end of June 2022 with the aim of containing the impact of the Coronavirus crisis on the country's economy. The CBUAE launched the Targeted Economic Support Scheme (TESS) in March under the AED100 billion initiative to cushion the UAE’s economy from repercussions of the COVID-19 pandemic. A wide range of integrated relief measures was launched for the UAE's banking sector to support funding, liquidity, lending and capital among other facilities.

On Tuesday, the CBUAE issued a statement, noting that financial institutions will continue to benefit from the collateralised AED50 billion zero-cost liquidity facility until the end of June next year in order to "provide new loans and financing to individuals, small and medium-sized enterprises (SMEs), and private corporate" impacted by the pandemic.

Under the TESS, the CBUAE will also continue financing loan deferrals until the end of 2021. In addition, the outstanding financing for the TESS deferrals shall be fully phased out by December 31.

Speaking about the development, CBUAE Governor Khaled Mohamed Balama said that the extension of TESS will help the financial system in providing steady support to key sectors affected by the COVID-19 pandemic.

"This is done to support the recovery phase, in line with the CBUAE mandate to ensure financial and monetary stability," the UAE Central Bank Governor added.

The International Monetary Fund (IMF) published its World Economic Outlook report earlier this month. According to the report, UAE's economic growth forecast for 2021 is predicted to increase to 3.1 percent. This development has come in line with the UAE's proactive response to Coronavirus and positive handling of the health crisis.

The forecast is significantly up from the 1.2 percent predicted in October 2020. However, the economic growth is likely to drop to 2.6 percent in 2022 after which it will stabilise through to 2026, the IMF report added.