Dead Sea, Jordan: The Dubai Department of Finance has disbursed over half the $10 billion (Dh36.73 billion) it raised in the first tranche of a $20 billion bond issue earlier this year. It now expects to raise the second $10 billion by the end of 2009, said Nasser Al Shaikh, the director-general of the department.
"Assessing the requirements of the government related entities and so on, I think it will happen in this year," he said at a discussion on the impact of the global economic crises on Dubai, at the World Economic Forum on the Middle East, being held at the Dead Sea in Jordan.
The government will support key corporations in Dubai because they play an important role in its development strategy for the emirate, said Al Shaikh.
"The existence of these corporations is very important to us as the government because they play a very important role in Dubai achieving its strategic objectives.
"Dubai cannot live without Emirates airline [and] the Dubai International Financial Centre (DIFC). Dubai cannot live without some components of Dubai Holding and Dubai World.
"Of course not every single business venture they have will remain there. When you are innovative you try 10 things, five or six might work and this you keep," he explained. The Dubai government has sold US$10 billion in five year bonds, to the UAE Central Bank, to raise funds to support some government related entities.
"We realised that the markets would be tight for some of our key players. The bond programme is to support the government related entities, since it is tough for corporates to raise money and easier for the sovereigns," Al Shaikh said. He indicated that the tough conditions were set to continue.
"We are willing to raise more money going forward to support the government related entities," he added.
However, the companies will not be given a blank cheque and the government has insisted they go back to their business plans and make "tough calls", said Al Shaikh.
"This is important because it is borrowed money and we need to ensure it can be repaid," he explained.
The plans of companies that are applying for funds are assessed by the finance department, with the help of consultants, and then forwarded to the Supreme Fiscal Committee for a final decision. Al Shaikh declined to go into details of the criteria being applied for funds to be granted.
He explained the department had agreed with the companies that it would not release their names or the amounts that they may receive. Companies could reveal the details themselves..