The UAE Federal National Council has approved the planned public debt law at its meeting on Tuesday, the governmental body announced.
The law is a precursor to the issuance of the country’s first sovereign bond and now needs presidential approval which means it has to be sent to the UAE cabinet to be fully endorsed.
The UAE has said it is considering a federal bond issue together with the creation of a debt management office after the passage of the debt law.
Last year, the FNC passed a draft of the public debt law, which caps the value of public debt Â¬ or debt issued by the federal government to 45 per cent of the UAE’s total GDP, or Dh300 billion, whichever is smaller.
The legislation says “total local public debt should be at 15 per cent of the GDP.”
The UAE plans to sell federal bonds to help fund budgetary spending on infrastructure.
The public debt law is also meant to encourage local-currency debt issues and build up a local debt market.