The letters of guarantee issued by banks and other business entities in the UAE amounted to Dh12.7 billion during the first nine months of 2018, a growth of 15 per cent as compared to the end of 2017, a media report said.

In September, the value of the letters of guarantee provided by UAE-based banks to different business sectors increased by Dh500 million to Dh97.3 billion from Dh96.8 billion in August of the same year, reported Emirates news agency Wam, citing the Central Bank of the UAE.

A letter of guarantee is a type of contract issued by a bank on behalf of a customer who has entered a contract to purchase goods from a supplier. The letter of guarantee lets the supplier know that they will be paid, even if the customer of the bank defaults.

According to CBUAE statistics, Q1 of 2018 saw UAE banks issuing letters of guarantee worth Dh1.7 billion, with Q2 witnessing Dh9.5 billion worth of guarantees, bringing their total value to Dh95.8 billion.

During Q3, their value declined from Dh97.8 billion to Dh96.8 billion in August before increasing to Dh97.3 billion after a number of individuals and institutions fulfilled their financial commitments.

The International Monetary Fund (IMF) has projected 2.9 per cent non-oil GDP growth for the UAE in 2018, and 3.9 per cent by 2019, driven by higher government spending and rising oil revenues.