Dubai to pay debts, go ahead with projects

[Naveed Yaseen]

DUBAI: Dubai will pay its massive debts and will go ahead with its ambitious development projects, the emirate’s ruler Sheikh Mohammed bin Rashid al-Maktoum told an economic conference on Monday.

The economic crisis “will not deter Dubai’s ambitions of implementing its development plans and will not divert it from its leading position and will not (keep) it from playing its role in the arena of the international economy,” Sheikh Mohammed said.

Unlike the United Arab Emirates’ capital Abu Dhabi, Dubai has no significant oil resources, and has been hard hit by the economic crisis, with property prices plunging by 50 per cent from their peak.

A study issued by Standard and Poor’s last month estimated that state-related companies in Dubai are due to repay nearly $50 billion in debt, 70 per cent of the Gulf emirate’s estimated GDP, within the next three years.

To meet the obligations of its companies, Dubai is issuing treasury bonds worth $20 billion, half of them subscribed by the central bank of the UAE. Sheikh Mohammed expressed confidence that the second part of Dubai’s bond programme will be “highly received by subscribers” and said the resulting money “would be directed to settle Dubai financial obligations in the coming years.”

Some 400 real estate projects in the UAE, valued at around $300 billion, were reportedly frozen due to the crisis. Local real estate giant Emaar announced losses of $350 million for the second quarter of 2009.

Among the many grandiose projects that were shelved by government-linked companies was a $95 billion development of a new district within Dubai. However, the government has pressed on with infrastructure projects, including the construction of the Dubai Metro which opened in September.

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