CGI Gulf Insights of the Week Jun 21 2020

  • ByCGI Gulf Insights of the Week
  • Sunday, 21 June 2020
  • Published inJune 2020
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Country Risk Update
United Arab Emirates

Risk Indicator  - DB3c
Risk Level        - Slight

Ratings Trend  Deteriorating 

Dubai debt concerns resurface as Covid-19 hits the sectors in which government debt is high. The UAE continues to strengthen its position as a regional safe-haven and business hub. Government policy favors local firms and can change arbitrarily and without warning. Access to global markets from Dubai is among the best in the world.

Market Overview
Iran's currency plummets against the dollar amid coronavirus, sanctions
Iran’s currency plummeted against the US dollar as the country continues to grapple with the economic implications of US sanctions and the coronavirus. The rial fell to as low as 188,000 against the dollar in the free market on Saturday, according to foreign exchange shops and websites. The currency traded at around 150,000 when the country recorded its first case of Covid-19 in February. The rial has nosedived by more than 500% in value from 2015 when the Islamic Republic accepted curbs on its nuclear program in exchange for some sanctions relief.
Corporate tax in UAE will turn away investors, says GWS Group chairman
The introduction of a corporate tax in the UAE will turn away international investors and wealthy residents, according to the chairman of tax advisory GWS Group, in response to a prediction by Emirati lawyer Habib Al Mulla expecting Covid-19 to accelerate the implementation of the tax across the GCC to replace the current government fee system. Al Mulla said last week: "This is a common issue for the Gulf countries because they have similar economic structures and face similar economic challenges. From a Gulf perspective, it's a step we have to take. It's unavoidable. The governments need to diversify their sources of income to something which will be steady and not as reliant on one commodity". 
Dh50 billion: Leading UAE banks fully utilize liquidity relief funds to support customers
The UAE’s banking sector continues to roll out relief measures to individuals and businesses impacted by the COVID-19 outbreak with 15 national banks fully utilizing their share of the Dh50 billion liquidity support package provided by the Central Bank of UAE (CBUAE) under its Targeted Economic Support Scheme (TESS). Last week, the temporary committee that handles impacts of COVID-19 held its fourth meeting, chaired by Sultan bin Saeed Al Mansouri, Minister of Economy discussed the national efforts to support the economy and the best ways of limiting the effects of the pandemic on various business sectors.

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