Despite having spent huge sums of money combating the global financial crisis, governments and policy makers in the Gulf face new challenges as the threat of weak or even negative economic growth looms.
In the UAE, a total of Dh120bn (US32.67bn) in aid, in the form of deposits and loans, has been extended to banks. In Abu Dhabi, five banks last month received Dh16bn as part of a recapitalisation plan. Also last month, Dubai sold $10bn in bonds to the Central Bank as part of a $20bn bond programme aimed at helping the emirate meet its financial obligations.
These efforts, along with similar measures elsewhere in the Gulf, have helped bring down the interest rates banks charge each other on short-term loans. They have also left banks with stronger balance sheets.
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