DUBAI: The UAE central bank said yesterday it would form a committee with bank officials, its latest move to deal with the challenges posed by global financial turmoil.
Most Gulf countries have sought to ease tight liquidity and prop up sagging investor confidence with an array of policy steps since the global credit crisis deepened in late September.
Last month, the UAE central bank bought $10 billion in Dubai government bonds to give state-linked firms in the emirate access to cash to settle debts as they face a real estate slump.
The government of Abu Dhabi also said last month it would inject $4.4bn to recapitalise five of its banks.
"The action taken by central bank, the local and federal governments have been timely and effective in addressing the challenges stemming from the global crisis," the central bank said.
It said a committee including central bank officials and representatives from the banking sector had been formed to discuss future measures to address a crisis that has brought a regional economic boom to an end.
"In order to preserve and build on the confidence measures, a decision was taken to form a joint taskforce comprising of representatives from central bank and national banks to meet on a regular basis for reviewing matters of mutual concern and suggest remedial action," the central bank said.
Both Dubai and the federal government have already set up separate committees to deal with the crisis that is expected to hit economic growth in the world's fifth-largest oil exporter this year.
Since September, the UAE has slashed interest rates, promised to guarantee bank deposits and offered more than $32.67bn worth of emergency facilities for banks to bolster the financial system and defrost credit markets.
Meanwhile, the UAE said it was revamping the way it develops its federal budget, including releasing budgets every three years and adopting a "zero-based budgeting" format.
The first three-year budget would run from 2011 to 2013, and the draft would be ready by November this year, the oil exporter's Ministry of Finance said.
The UAE currently releases budgets every year and uses an incremental budgeting process.
"We are moving away from incremental budgeting because incremental budgeting presumes a stable environment where current activities persist at roughly the same cost in future years," the ministry said.
"Zero-based budgeting is useful for rapidly growing GDP and (the) need for large-scale infrastructure development."