Abu Dhabi’s Tourism Development & Investment Company (TDIC) has cut its planned expenditure for 2011 and delayed a raft of projects as the emirate revises down its growth plans and tries to exercise more financial discipline.
TDIC said in the prospectus for a planned bond issue that it had cut its 2011 budget from AED18.6bn ($5.06bn) to AED13.4bn. It also confirmed that GDP growth and population assumptions used in the emirate’s 2030 Economic Vision were being revised downwards (MEED 03:06:11).
The downgrade of growth forecasts in Abu Dhabi has already led the Department of Transport to scale back its pipeline of projects.
|TDIC Financial Results|
“Whilst the long-term strategy remains in place, the government is focusing on ensuring that financial discipline is maintained and identifying specific projects which, in light of changed circumstances, may be deferred or adapted to reflect those circumstances,” says the TDIC prospectus, published in late June.
It is the latest sign that Abu Dhabi is scaling back its ambitions and trying to control spending. MEED revealed in June that the value of infrastructure contracts awarded in Abu Dhabi in the second quarter fell by 81 per cent (MEED 24:06:11).
“Abu Dhabi is trying to get its house in order, but is suffering from a lack of direction. Its development model was really based on just following Dubai,” says a UAE-based economist. “The non-oil recovery is progressing in Dubai, but it is just not progressing in Abu Dhabi.”
TDIC said it took the decision to delay new projects in late 2010, as a result of its view that operations “would continue to be adversely affected by the current global economic slowdown, and in particular by the downward pressure on real-estate sales prices.”
TDIC is currently on an investor roadshow to gauge appetite for a potential bond issue. It is still unclear if the company will go ahead with an issue after two other UAE companies, Dolphin Energy and Majed al-Futtaim put bond issues on hold because of high pricing in the debt markets.