Special Report: UAE - Dubai faces up to economic challenges
Omar bin Sulaiman, governor of the Dubai International Financial Centre and vice-chairman of the Central Bank of the UAE, declared on 13 October that the worst of the region’s financial crisis was over
But it is still too soon for Dubai to relax, given its large debts. The emirate has at least $48.3bn to pay off over the next three years: $13.1bn in 2010, $19.5bn the following year and $15.7bn the year after that.
Financial analysts say that Dubai should be able to manage its debt repayments fairly comfortably over the next 12 months, assuming that it sells its next $10bn bond before the end of the year, as planned. But the medium-term outlook is more troubling, and the level of debt is likely to prove too big for Dubai to pay off by itself.
Dubai’s economic woes are directly attributable to the collapse of its real estate sector amid the global liquidity crisis.
Any economic recovery in the emirate will be contingent on an upturn in the property market, which is unlikely to happen any time soon as potential buyers remain cautious.
Until that changes, Abu Dhabi and the UAE federal government will remain Dubai’s lenders of last resort.
Even if the regional crisis has passed, Dubai still has some way to go until its own partic-ular economic woes are over.
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