The United Arab Emirates government is contemplating the enactment of a law by year end which will allow the federal government to issue bonds. The UAE would issue around 80 billion to 100 billion dirhams ($22 billion to $27 billion) worth of debt, a senior finance ministry official stated. The official further stated that he expects the law to be ratified in six to nine months. The seven emirates in the UAE issue bonds, but the UAE federal government has not issued any bonds due to the absence of a law, which has been in preparation for years. The plunge in oil prices since mid 2014 has pushed state finances into negative territory, and issuing bonds at the federal government level would give the UAE another fund-raising alternative and would reduce pressure on the individual emirates to draw down their assets. The largest emirate, Abu Dhabi, is expected to cover part of its deficits in 2016 and 2017 by drawing down assets at its sovereign wealth fund, the Abu Dhabi Investment Authority. After the law had been ratified by the UAE’s federal national assembly (FNC) and rulers, the central bank would be responsible for issuing the dirham-denominated bonds. The projected issuance of 80 billion to 100 billion dirhams was smaller than initial expectations.
