UAE may face risks from deepening euro crisis

The UAE and other Gulf countries could face major financial repercussions if the euro zone debt crisis spreads from the bloc’s peripheral states to its core and infects global markets, the International Monetary Fund said.

Risks are particularly serious for economies that depend on foreign financing and have financial links to Europe, the IMF said in a report dated April 27, which it prepared for consultations with the UAE and released in June.

“While vulnerabilities have decreased since 2008, the results of this analysis nonetheless suggest that the [UAE] authorities need to remain vigilant to global shocks and continue to strengthen buffers.”

The banking system of the UAE, the world’s number three oil exporter, is only moderately exposed to Europe, the IMF noted. Foreign liabilities are about 19 percent of its total liabilities, while Europeans hold about 20 percent of UAE banking system assets.

via UAE may face risks from deepening euro crisis – IMF – Banking & Finance –