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Halting the rumours over dubai's debts
Nothing dispels a destructive rumour more quickly than the hard facts, and this week Mohammad Al Abbar, chairman of the Dubai Advisory Council, and director general of Dubai's Department of Economic Development, has gone out of his way to make clear that Dubai can handle its debts.
- Gulf News
- Published: 23:15 November 25, 2008
Nothing dispels a destructive rumour more quickly than the hard facts, and this week Mohammad Al Abbar, chairman of the Dubai Advisory Council, and director general of Dubai's Department of Economic Development, has gone out of his way to make clear that Dubai can handle its debts.
For the past few months there has been a growing crescendo of rumours that "Dubai will need rescuing by Abu Dhabi". Al Abbar's statement on Monday dealt head on with this.
He made clear that the government of Dubai covers its costs with its revenues, and that the debt is not there to run the day-to-day business of Dubai. He made clear that the debt serves government institutions and state-owned entities to fund long-term infrastructure development.
He spelt out that the government's own debt is only $10 billion (Dh36.7 billion). He said Dubai's affiliated companies have debts totalling $70 billion, but emphasised that even this sum is covered by their assets of $260 billion. He stated bluntly that the government of Dubai "can and will meet all its obligations".
Al Abbar's statement was an important recognition that the government of Dubai needs to be transparent, and make clear how the emirate will handle the effects of the global financial crisis. At a time when the US and European governments are devising huge rescue packages, it is reassuring to have a senior government official explain exactly where Dubai stands.
It also allows more confidence in the future. It may very well be that some of Dubai's entities will seek some refinancing on specific projects, following the normal course of their plans.
This money may come from Dubai, or Abu Dhabi, or international sources. But what Al Abbar has said helps ensure that these transactions are done in a transparent manner, in a transparent market.
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