Several Arab central banks announced a set of rapid measures to support various economic sectors, especially the banking sector, in confronting the effects of the war in Iran.
The war led to the almost complete closure of the Strait of Hormuz, through which about a fifth of global oil and gas trade passes, leading to record highs in energy prices, disrupting global supply chains, and increasing commodity prices.
In addition, there are expectations of new rises in inflation rates, and a return of central banks to monetary tightening after a period of interest rate cuts.
The measures taken by central banks include reducing liquidity standards applied to banks, increasing the maximum financing limit, injecting financial liquidity into the banking sector, and providing financing to purchase basic commodities.
Qatar Central Bank:
The Qatar Central Bank announced that it will provide facilities for repurchase operations unlimited in Qatari riyals, in addition to facilities for overnight repurchase operations. The bank will also launch facilities for repurchase operations for a period of up to three months.
The bank said that these measures enable banks to manage their flows with a degree of certainty, and the bank also added measures to support borrowers.
The Qatari Central Bank explained that the bank’s financial position is in excellent condition, that the liquidity situation in the country is solid, and that capital levels significantly exceed regulatory requirements.
Central Bank of Kuwait:
The Central Bank of Kuwait also launched a package of stimulus measures for local banks, which included supervisory instructions and macroprudential policy tools regarding regulatory liquidity requirements and the capital adequacy rate, ensuring increased flexibility of the local banking sector to support aspects of economic activity and support the stability of banking work.
The Bank of Kuwait explained that the measures included reducing the liquidity standards applied to banks, such as the liquidity coverage standard, the net stable financing standard, and the regulatory liquidity ratio, in addition to raising the maximum limits for the cumulative gaps in the liquidity system and raising the maximum limit available for granting financing.
Analysts at Jefferies Financial Group estimated that the UAE Central Bank pumped more than 30 billion dirhams, equivalent to about 8.2 billion dollars, into the banking system, in a move aimed at reducing the repercussions of the war on Iran and enhancing liquidity stability.
Emirates Bank:
Jefferies explained that UAE Central Bank data showed that commercial banks used a tool known as the Emergency Liquidity Insurance Facility, or “CLIF,” which is a mechanism that was launched in 2022, allowing banks to withdraw from the Central Bank’s reserves in exchange for different types of guarantees and for borrowing periods extending to a month or more.
Earlier last March, the UAE Central Bank launched a support package aimed at enhancing liquidity and lending capacity in the financial system.
According to Jefferies, the liquidity conditions in the UAE banking sector are still good despite the pressures related to regional tensions.
Jordanian Central Bank:
The Central Bank of Jordan also launched a package of proactive precautionary measures to support the national economy, with a total size of 760 million dinars, aiming to support the tourism sector, enhance food security, and strengthen banking liquidity in light of regional and international developments.
This package is distributed to enhance banking liquidity by reinjecting about 700 million dinars into the money market by reducing the mandatory reserve ratio by two percentage points on current account deposits and on demand at banks operating in Jordan, to 5% for commercial banks and 4% for Islamic banks, which leads to providing additional loanable liquidity to banks estimated at about 300 million dinars.
Moreover, as a precautionary measure, the Central Bank gradually reduced the balance of certificates of deposit issued since the outbreak of the Iran-Israel war in June 2025 from 550 million dinars to reach 150 million dinars, which will be issued next Tuesday, April 7, which led to the reinjection of 400 million dinars of loanable liquidity into the money market.
The Central Bank of Jordan confirmed that it has supported the tourism sector by providing soft financing facilities under special conditions through banks for tourist facilities affected by the prevailing regional conditions. These facilities provided within its program to finance economic sectors aim to cover operational expenses, especially the salaries of workers in these facilities, in order to ensure the continuity of work in them, preserve existing job opportunities, and accelerate the pace of their recovery as soon as the situation stabilizes and until the end of 2026. The government will bear the interest and returns resulting from the advances and new financing granted within this measure.
With regard to enhancing food security, the Central Bank provided concessional financing with special conditions worth 60 million dinars through banks and within its program to finance economic sectors allocated exclusively to finance the import of basic food commodities. In cooperation with the Jordanian Loan Guarantee Company, the guarantees for advances/financing granted through banks operating in Jordan were covered within the Central Bank’s program for this purpose, at a rate of 85% of the value of the advances/financing granted.
