ABU DHABI, 23rd April, 2022 (WAM) — The Ministry of Finance on Wednesday announced the launch of Treasury Bills denominated in Dirhams.
“The initiative is expected to create a local-currency bond market and leverage other sources of government funding. But this move is particularly important in the broader context of the UAE’s ongoing efforts to build a robust post-pandemic economy. , diversified and sustainable,” commented a local daily.
Bonds worth AED 1.5 billion ($400 million) will initially be issued in two, three and five years. “This is an understandably modest start for the dirham debt markets compared to what is being offered in US dollars, the de facto currency of the world, whether by individual emirates or other sovereign nations. around the world, and can therefore attract a greater number of investors.
“However, issuing certificates denominated in dirhams will have long-term benefits, as it is expected to boost the local financial and banking sector in the long term and provide safe investment alternatives for local and foreign investors,” said The National. in his editorial today.
As Vijay Valecha, managing director of financial services company Century Financial, stated, “Developing a local currency bond market will help provide a safe investment vehicle in dirhams, thereby increasing the liquidity of the currency.” . This, in turn, is expected to increase the demand for dirham in the GCC region.
The Finance Department’s decision comes six months after it began issuing sovereign bonds, in US dollars, for the first time in the federation’s history. It has set up a national bond program, relying on each emirate’s own debt issues. Any debt program, open to local, regional and international investors, not only diversifies revenue, but also increases levels of transparency and efficiency. The reward will be the ability to borrow at cheaper rates.
The fact that the UAE raised $4 billion in October last year is a testament to the strength of the economy and its handling of the pandemic and recovery, the newspaper said, adding that the announcement Wednesday of the launch of bonds in dirham marks a new maturation of the economy. and financial landscape.
“It also provides another building block of the federal structure.
“As the UAE, like all other countries, seeks to maximize post-pandemic recovery opportunities, these bonds should provide an additional source for the federal government. It had already introduced value added tax in 2018 and should introduce a corporate tax regime in 2023,” he continues.
Also on Thursday, the Abu Dhabi Global Market, the emirate’s financial hub, released a “consultation paper” to solicit comments on a series of proposals it has made to improve its capital markets and framework. regulation of virtual assets.
The continued advancement of the financial system must be seen in the broader context of the UAE’s efforts to build an economy geared for decades to come, the Abu Dhabi-based English-language newspaper noted.
“Even before marking its 50th anniversary last year, the country had looked forward to the next half century. The COVID-19 pandemic having accelerated a number of changes in the way we live, work and do business, the government has been very nimble in building its digital economy, service industry and post-oil future, and has also enacted a series of legislations over the past two years in the aim to make the UAE an even more attractive destination for investors and workers from across the globe.
“Wednesday’s announcement is another important step the country has taken to bond for the future,” the editorial concluded.