2016年-IMF国际货币组织全球_United_Arab_Emirates_Selected_Issues_52页_1mb

United Arab Emirates: Selected Issues Summary

Core Content

This report provides an analysis of the performance and risks posed by Government-Related Entities (GREs) in the UAE, as well as an assessment of the financial stability of the banking system amid lower oil prices and higher short-term interest rates. It also examines the competitiveness and diversification of the UAE's economy in the context of fiscal consolidation.

Main Risks Posed by GREs

Overview

• GREs are a significant part of the UAE economy and have played a key role in economic diversification.
• Despite improvements in their financial performance, GREs still pose substantial risks due to high leverage and weak debt servicing capacity.
• The debt-to-GDP ratio of GREs has decreased over the past six years, especially in Abu Dhabi, but remains high in Dubai.

Debt and Financial Indicators

• In 2015, GREs' debt in Dubai was 69.6% of Dubai GDP, down from 69.9% in 2010.
• In Abu Dhabi, GREs' debt was 27.4% of GDP, compared to 48.7% in 2010.
• GRE debt has shifted from loans to bonds, with the share of bonds increasing from 39% in 2010 to 46% in 2015 in the UAE.
• In Abu Dhabi, the share of bonds increased from 32% to 67% over the same period.
• The average interest coverage ratio (ICR) for GREs in 2014 was about 2, much lower than the overall corporate sector's ICR of 10.9.

Performance of GREs

• The performance of GREs has improved, with profitability increasing and total liabilities growing at a slower pace than assets.
• However, many GREs still exhibit low returns on assets (ROA) and returns on equity (ROE), indicating inefficiency and weak financial health.
• Banks have shown more stability, while real estate and construction companies in Abu Dhabi have improved since 2010, but not in Dubai.

Potential Risks

• Lower government transfers, increased sovereign issuance, and tighter global financial conditions could lead to GREs re-leveraging and higher financing costs.
• The risk of debt servicing is exacerbated by the low ICR and high leverage, especially in non-financial sectors.
• The report highlights the need for monitoring potential risks to the sovereign balance sheet and the financial system.

Financial Stability of the Banking System

Introduction

• The banking sector has experienced significant growth and development, particularly in the context of lower oil prices and higher short-term interest rates.
• The report assesses the impact of these macroeconomic factors on liquidity and solvency.

Banking Sector Developments

• The sector has shown resilience, with improvements in financial soundness indicators.
• The report includes an analysis of liquidity buffers and the probabilities of default under adverse macroeconomic scenarios.

Impact on Liquidity and Solvency

• Lower oil prices have reduced government revenues, which in turn affects the ability of GREs to service debt and support the banking system.
• Higher short-term interest rates increase the cost of financing, which could impact the solvency of banks and other financial institutions.
• The report suggests that the banking sector is well-positioned to manage these challenges, but continued monitoring is necessary.

Competitiveness and Diversification

Economic Diversification

• The UAE has made progress in diversifying its economy, with growth in non-oil sectors such as services, real estate, and tourism.
• The report highlights the importance of continued diversification to reduce reliance on oil revenues.

Competitiveness

• The UAE has a relatively high ranking in the Global Competitiveness Index (GCI), indicating a competitive business environment.
• However, there are challenges in terms of productivity, labor costs, and innovation.

Productivity and Investment

• Productivity and labor costs have been increasing, which could impact the competitiveness of the UAE's economy.
• Investment in non-oil sectors has been growing, but the overall impact on economic growth is still limited.

Policies and Reforms

• The UAE has implemented various policies and reforms aimed at improving competitiveness and diversification.
• These include efforts to enhance corporate governance, transparency, and financial stability.

Key Information and Findings

• GREs are a major source of growth and development for the UAE economy.
• The performance of GREs has improved, but they remain vulnerable due to high leverage and weak debt servicing capacity.
• The financial stability of the banking system is a key concern, especially in the context of lower oil prices and higher short-term interest rates.
• The UAE has made progress in economic diversification, but more needs to be done to reduce reliance on oil revenues.
• The report recommends an integrated approach to managing GRE risks, including prudent fiscal policies, enhanced macro and microprudential frameworks, and improved corporate governance and transparency.

Policy Recommendations

• Develop an integrated approach to managing GRE risks, including prudent fiscal policies, enhanced macro and microprudential frameworks, and improved corporate governance and transparency.
• Monitor the potential risks to the sovereign balance sheet and the financial system.
• Continue efforts to diversify the economy and reduce reliance on oil revenues.
• Implement policies to improve competitiveness, including investment in innovation and productivity.