Emirate will overcome short-term issues

Dubai The Dubai Government will overcome the current short-term challenges with appropriate measures that are already under way, a top Arab banker said, as he urged Dubai officials not to be shy of the debt burden as most western economies have been witnessing similar challenges recently.

"Dubai and the UAE will take appropriate steps to restructure the debt of Dubai World and create an effective dialogue with the creditors," Adnan Ahmad Yousuf, Chairman of the Union of Arab Banks, told Gulf News yesterday.

He believes that this is a temporary setback. However, he recommended that the Dubai Government should also oversee the other large conglomerates and try to manage their financial situations by injecting fresh capital and restructuring their debts.

"I have strong confidence in the UAE economy, It is still an open market for all private and public companies to develop businesses," Yousuf said.

Last week Dubai World, a state-owned diversified holding company, asked its creditors for a six-month delay in payments of a sukuk worth $3.5 billion, which is to mature on December 14.

"The governments of the US, UK, Germany and other large economies injected huge amounts of cash about six months ago to rescue their economies, banks and companies... so there's nothing wrong about Dubai's decision and transparency," he said.

He pointed out that these companies are asking for rescheduling the debt for a short time.

"Dubai's decision is a logical one in trying to manage its debts as the world suffers from the economic meltdown," Yousuf said.

"Here we should differentiate between the debt of companies owned by the government and the government's own debts." he said.

He was critical of the media outcry over the announcement. "The over-reaction against Dubai World's announcement was just propaganda through which a section of the media is trying to send negative signs to create a bigger bubble and fluctuation in the regional and international stock markets," he said.

Unfair comments

Yousuf urged organisations, financial institutions and the markets not to trust the foreign analysis or unfair comments about Dubai.

"The banks in the UAE are well capitalised and the UAE Central Bank has enough liquidity to support any short-term gap. Also, the largest Arab bank is based in the UAE. So there isn't any immediate threat to the financial system.

"Dubai has a lot of great achievements that attracted others to follow in the footsteps of its development path. In ten years Dubai has achieved what the Arab world could not in 50 years," Yousuf said.