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DUBAI, Oct. 13 (Xinhua) -- The United Arab Emirates (UAE) issued on Saturday a public debt law to support the setup of a government bond market through which public debt instruments can be traded in UAE financial markets, the UAE Ministry of Finance said in a statement.

The ministry said the new Federal Decretal Law No. (9) of 2018 will also "help the banking sector meet international liquidity rules as soon as they are issued."

The law will "enable banks operating in the state to purchase government bonds denominated in dirham, the UAE currency, or foreign currencies, which will help them comply with Basel III requirements."

Basel III is an international regulatory accord to improve the regulation, supervision and risk management within the global banking sector by strengthening bank capital requirements by increasing bank liquidity and decreasing bank leverage.

UAE Minister of Finance Hamdan Bin Rashid Al-Maktoum said "the law will contribute to enhancing the state's competitive ranking, boost investors' confidence in the national economy and raise transparency regarding management of public finances."

Public debt financing rose in significance in recent years in the oil-rich Gulf Arab states in the wake of the oil price decline which lasted from end of 2014 until the mid-2017.

Earlier in the month, the International Monetary Funds said the UAE's fiscal deficit will remain unchanged at approximately 1.6 percent of Gross Domestic Product this year, but is expected to return to a budget surplus in 2019 as the price of oil reached a four-year high in recent weeks, hovering above 80 U.S. dollars per barrel (159 liters).

The IMF has urged the Gulf states in recent years to establish liquid bond markets in order to diversify the sources of financing and to cushion the impact of future instabilities on the energy markets.