On March 14th, 2020, the Central Bank of UAE announced a comprehensive AED 100 billion targeted economic support scheme to contain the repercussions of the COVID-19 pandemic.
This decision comes at a time when the UAE economy is affected by the global slowdown in growth and trade caused by the pandemic as well as the sharp decline in oil prices.
In the last couple of weeks, authorities and governments have acted rapidly to contain the spread of the virus and enhanced the stimulus needed to support the economies. Last week, several prudential and securities regulators issued guidance commenting on the application of IFRS 9 in the current environment as the banks started to worry about the potential spike in provisions of the loan portfolios.
On the 27th of March 2020, the IASB issued a document to support the consistent application of requirements in IFRS standards, specifically around the application of the Expected Credit Loss (ECL) under IFRS 9 in the context of COVID-19 pandemic.
In this publication, we will analyse the IFRS 9 accounting implications of the recent measures taken by the UAE central bank and the uncertain situation related to the pandemic in the accounting of the Expected Credit Losses and the recent recommendation of International Accounting Standards Board (IASB).