Dubai: The Dubai Financial Support Fund was launched recently. Abdul Rahman Al Saleh, Director General, Dubai Department of Finance sheds light on this.
Can you explain what is the purpose of this fund?
I would like to go back to earlier this year whe n the government took a very important step in issuing the $20 billion (Dh73.48 billion) bonds. That was an immediate decision to support the Government-Related Entities (GREs) to meet their obligations.
From there, we have been working closely with our consultants to get the right set-up. The right set-up in the sense of how we manage the funds, how we'll be able to raise additional funds and how we can work very closely with the GREs.
And now we have the decree, signed by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, setting up the Dubai Financial Support Fund to be a separate legal entity, working very closely with the government and supporting all strategic projects which are very important for the government strategy.
The Fund will be working with the GREs and supporting them, but it will be on a commercial basis so that it's challenging for them to meet their obligations and to be able to manage their requirements in the long term.
Isn't this just a bail-out for those government companies that have borrowed too much in the past?
No, it isn't a bail-out. It is important to stress here that the GREs have a very solid strategic position in the long term, in the sense that they have very variable and strategic projects.
Also, they have revenue generating that's helping them in continuing their operations. It is only to support them in meeting immediate obligations at the moment.
And the support is in the form of commercial loans which will be met by them in due course as the market conditions improve. So it is not a bail-out.
Investors are looking towards the maturity of Nakheel's $3.5 billion Sukuk in December, is the government going to provide some support to Nakheel in order for it to meet its debt obligations?
In principle, we don't disclose how and when we support the GREs, but we are working very closely with all of them, and during this time all of them are subject to a defined process of getting the support and it is presented to the Supreme Fiscal Committee to make the final recommendations and allocate support.
It is all based on very important criteria that must be met and the important issue is that it's strategic and it has a significant impact on the economy to get the support.
How was the first $10 billion spent and which companies received funds?
We do not disclose how the funds are disbursed, it's just like any other commercial terms. We leave it up to the recipients if they wish to disclose.
We follow certain criteria to allocate the funds, and it all depends on the size of the entity, the project that it involves, with priority given to infrastructure projects that are important to the strategy of the government in the long term.
The Dubai Financial Support Fund will start with a total of $20 billion, but there was a figure of $80 billion in debts announced in the recent past. So there's clearly a shortfall here. How will your Excellency address that?
The published figure about the total debt of Dubai is referring to the combined debt of the government and the GREs.
The government part of the debt is around $20 billion, which is manageable. The GREs' debt is also manageable in the long term.
The Entities are working very closely with us and we know that they have strategies to manage their debt over the long term.
We are supporting them from the $20 billion bonds, but we also have strategies to raise additional funds as and when required to support these Entities and any other strategic projects for the government, mainly the infrastructure projects which are in progress now.
His Highness Shaikh Mohammad recently said the worst is over, but more challenges ahead. Can you elaborate on that?
Yes, the worst is over. The fundamentals of Dubai are strong. The strategy which was announced by His Highness is in progress. In the last few years the government has developed the infrastructure which is very unique in the region.
The Metro system is on schedule to start on September 9. The airport expansion projects are also in progress, as per their plan.
So yes, we feel that the way forward is very positive and we are very optimistic.
