Dubai World is scheduled to meet banks in Dubai on 21 December to begin talks about its proposed standstill agreement on around $22bn of debt.
The meeting will be the first time that the government-owned holding company has met with its lenders since it announced on 24 November that it was seeking to arrange a standstill on its debt obligations.
The outcome of the talks has been confused by Abu Dhabi’s $10bn loan to Dubai World on 14 December, that enabled the company to pay off a $4bn debt due to be paid that day on Nakheel, one of the firm’s real estate subsidiaries.
The remainder of the $10bn would be used to service Dubai World’s interest and capital expenditure obligations, under the condition that the standstill agreement is in place by 30 April 2010.
In a further sign that Dubai is trying to regain control of its finances, Sheikh Mohammed bin Rashid al-Maktoum, the emirate’s ruler, issued a law that forces all government departments transfer their surplus revenues to the central government treasury. The new law “aims to regulate government departments’ public spending and control government revenues, as well as to provide an accurate database for revenues and expenditures,” the statement announcing the law said.
It added, “Government entities have to transfer their income to the government’s public treasury account, and they are prohibited from retaining any part of their income or spending it on their activities or investments or utilising it.”
The statement said this includes government departments and “government-related companies”.