UAE’s Central Bank said in a statement today that the overall liquidity in the banking system has returned to pre-COVID-19 levels, one-year after launching a stimulus package to support the economy during the pandemic.

In March 2020, the UAE Central Bank provided a $70 billion package of capital and liquidity measures as part of a Targeted Economic Support Scheme (TESS). Some of the measures have been extended to June 2021.

Banks’ drawdown of a zero-cost liquidity facility under the TESS scheme stood at $5.99 billion this month, down from a peak of $12 billion in the second quarter of last year, the central bank said.

“The introduction of the stimulus package came at a critical juncture and ensured that banks were able to mitigate funding and liquidity pressures and maintain their lending capacity,” Central Bank Governor Abdulhamid Saeed said in the statement.

He added that, as a base projection, the UAE’s economy is expected to grow 2.5 percent this year, following an estimated 6 percent contraction last year when it was hit by the twin shock of the pandemic and lower oil prices.

Ratings agency S&P Global Ratings said in a report on Sunday that economic recovery in the Gulf, particularly in sectors such as aviation, tourism, and real estate, will be slow, weighing on banks’ asset quality and profitability this year.