The declining price of oil could place additional pressure on Dubai’s refinancing obligations if the low prices remain for an extended period of time, say analysts.

In the short term, the diversified nature of the UAE’s economy, particularly Dubai’s rather than Abu Dhabi’s, has provided some protection against the immediate impact of the price decline.

The UAE’s fiscal and external breakeven oil prices, which stand at $77 a barrel and $60 a barrel respectively, are also lower than their GCC peers and give the government more fiscal flexibility.

A global research report from the US’ Bank of America Merrill Lynch says that given these conditions, Dubai will be able to tackle its refinancing demands in the near term.

Dubai still faces several multibillion-dollar debt obligations, a hangover from the financial crisis in 2008-09.

Government entity Dubai World is facing a $4bn debt maturing in 2015, and is currently finalising negotiations surrounding the restructuring of its $10bn debt obligation due in 2018.

Real estate developer Limitless, another Dubai government-backed entity, is also finalising revised repayment terms with creditors.

If the low oil price persists, meeting these repayments while at the same time ramping up government borrowing to support a pipeline of infrastructure projects could become more difficult for the emirate.

Dubai is planning multibillion-dollar developments to prepare for the hosting of the Expo 2020. Projects include the expansion of the new Al-Maktoum International airport.

“The possible increase in government external borrowing needs is set to take place against a more challenging backdrop,” says the research note.

The rebound in Dubai’s GDP growth has helped provide a buffer against the ill-effects of the low oil price.

The growth was driven by a broad base of sectors, with construction and real estate accounting for 21 per cent of GDP last year while the financial sector represented 11 per cent of GDP. The contribution to GDP of hotels, restaurants and manufacturing has also grown.