Stimulus schemes may hamper emerging economies

CROWDED OUT: UAE bank governor tells IMF that developed countries' stimulus packages could leave emerging economies struggling to raise cash through bonds. (Getty Images)

Emerging economies risk being crowded out of the international debt markets as developed countries step up bond issuances to finance their stimulus packages, the central bank governor of the UAE has warned.

“Emerging market sovereigns and corporates with financing needs…run the risk of being ‘crowded out’ as mature economies issue and guarantee substantial amounts of net debt in response to the crisis,” Sultan Al Suwaidi told the International Monetary Fund (IMF).

Abu Dhabi's $3bn bond issue earlier this year was almost two times oversubscribed, raising hopes that Dubai’s $10bn issue later this year will be well received by investors.

Dubai launched a $20bn bond programme in February and issued the first half to the UAE central bank.

The emirate is planning to issue another $10bn of bonds later this year.

Also on a bearish note, Al Suwaidi said that even cash rich governments need to factor in the possibility of a protracted downturn when drawing up budgets.

“Even for countries with relatively comfortable reserve buffers, the pace of the drawdown of reserves would have to be calibrated against a potentially prolonged downturn, and possibly supported by policy adjustment,” he said.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM