Suppliers will be paid within 15 days © Karim Sahib AFP/Getty Images
Suppliers will be paid within 15 days © Karim Sahib AFP/Getty Images

UAE moves to support government suppliers

31 March 2020

The UAE has adopted a series of measures to bolster federal government suppliers as it seeks to minimise the economic impact of the coronavirus pandemic.

The cabinet has ordered federal ministries and other bodies to fast track payments to suppliers, ensuring they are paid within 15 days.

It also passed a resolution exempting suppliers affected by the coronavirus from paying fines they had been charged as a result of delaying the fulfilment of federal government contracts.

The measures will last for three months and could be renewed, the government said.

It has also ordered federal public bodies to ensure that SMEs account for 90% of their purchases.

The measures follow an AED16bn economic stimulus package from the UAE government, on top of other packages announced by the emirates of Abu Dhabi and Dubai, along with that of the Central Bank of the UAE.

This brings the total value of coronavirus stimulus measures announced in the country to AED126.5bn ($34bn).

An economic stimulus package for Dubai’s free zones has also been announced, according the state news agency.

The Dubai Free Zones Council will postpone rent payments by six months, facilitate paying by instalments, refund security deposits and guarantees and cancel fines for companies and individuals. It will also permit temporary contracts for labour.

This comes on top of an AED1.5bn package announced by Dubai to reduce business costs and improve the financial liquidity of companies operating in the free zones.

The MENA region is likely to see growth slide due to the coronavirus pandemic, particularly oil-importing countries.

The Institute of International Finance (IIF) said GDP growth across the region was likely to move into minus figures at -0.3%.

It said MENA countries without liquidity to ramp up public services and support affected sectors, such as Algeria, Iraq, Bahrain, Oman, Lebanon and Tunisia, be most affected.

A global recession will lead to a reduction in trade, foreign direct investment and tourism flows, and remittances to Egypt, Jordan, Morocco, and Lebanon. Egypt stands to see a significant drop in Suez Canal transit revenue, the report said.

The nine MENA oil exporters will see a fall in hydrocarbon earnings in 2020 of $192bn – equivalent to 11% of GDP.

Oil exporters are likely to record large fiscal deficits due to the collapse in oil revenue, with public debt rising.

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