Higher capital requirements are also motivated by UAE’s institutional environment, which presented potential for improvements in areas such as resolution regime for banks and bankruptcy proceedings for corporate borrowers. I am pleased to say that concerted efforts are already underway to address them. Additionally, banks have opted to maintain significant capital buffers over and above minimum requirements.
This is the result of over two decades of implementation of critical structural reforms. We have a sound fiscal position, with manageable fiscal deficit and low levels of government indebtedness. We have low interest rates, manageable inflation, healthy external accounts—with record-high gross international reserves (GIR) and stable peso. In a sea of downgrades, rating agencies maintain the country’s investment grade status.