Official: Dubai won’t need new debt bailout
Sunday, November 28, 2010
DUBAI, United Arab Emirates (AP) — Dubai’s top fiscal officials said Sunday the indebted city-state will likely not need another bailout, but noted that cash-boosting proposals such as asset sales and offering shares in state-run companies are under consideration.
The comments were part of a rare show-and-tell by Dubai’s financial braintrust as they stressed they have a handle on debt crunch in the one-time Arab boomtown.
The aim was to portray a sense of calm and optimism a year after the global economic slowdown slammed the brakes on Dubai’s white-hot growth, triggering fears of a broader default as details of the emirate’s huge debt load became apparent.
To underscore the importance of the message, the group was joined midway through the presentation by Dubai’s ruler Sheik Mohammed bin Rashid Al Maktoum, who was personally humbled by the need last year for a $10 billion bailout by his oil-rich neighbor Abu Dhabi.
But a senior fiscal adviser, Ahmed Humaid Al Tayer, said he does not foresee the need Abu Dhabi to come to rescue again.
“I don’t see the need for more support” from the rulers in the United Arab Emirates’ capital, said Al Tayer, governor of the Dubai International Financial Center, the city’s global banking and investment hub.
Al Tayer was joined by other high-ranking financial strategists who presented a barrage of spreadsheet facts as evidence that Dubai has turned a corner, including a rise in air and sea port cargo and important economic ties to booming markets in India and China.
They also noted, however, that Dubai has been forced to retool its priorities from grand, city-sized projects to concentrate on quality-of-life plans, such as Dubai’s elevated metro trains, and business-friendly priorities including a fast-track cargo “corridor” from the Jebel Ali port to a new air terminal in the desert south of the city.
“The slowdown that took place over the last two years gave us in Dubai the opportunity to rethink, regroup and return to basics,” said Sheik Ahmad bin Saeed Al Maktoum, whose roles include chairman of the Dubai Supreme Fiscal Council.
He said tactics in coming years including efforts to strengthen Dubai’s own capital markets and possibly opening some state-owned companies to outside investors. He did not cite any companies, but another top official — Mohammad Ibrahim Al Shaibani — said shares “might one day” be offered for the fast-growing carrier Emirates, the region’s biggest airline.
In a possible sign of Dubai warming to share sales, mobile phone retailer Axiom Telecom is seeking to raise as much as $382 million next month in the UAE’s first initial stock offering this year. The company is owned by two family firms and Dubai Holding, an indebted conglomerate controlled by Dubai’s ruler.
Al Shaibani also said some of Dubai’s international holdings could be put up for sale if commercial and property markets rebound.
The portfolios of Dubai-run companies, including the debt-plagued Dubai World conglomerate whose financial woes triggered the crisis, include such landmarks as the luxury retail Barney’s New York, a stable of high-end U.S. hotels and stakes in Las Vegas casino operator MGM Mirage and Cirque du Soleil.
Al Shaibani estimated Dubai’s current sovereign debt at about $30 billion, but he said that did not including the “operating” debts of major state-run companies. For example, developer Nakheel — whose projects include Dubai’s palm-shaped artificial island — currently has nearly $24 billion in liabilities, officials said.
Earlier this year, the International Monetary Fund estimates the emirate of Dubai is shouldering as much as $109 billion in debt.
Al Shaibani, however, said no sales were “in the cards” for domestic properties and business, which he described as “strategic” elements of Dubai’s long-term goals.
On Saturday, the UAE’s economy minister, Sultan bin Saeed Al Mansouri, forecast the UAE’s growth next year at between 3 percent and 3.5 percent,
The briefing by Dubai official also coincided with the opening of the World Economic Forum, which is scheduled to bring academics and others from 60 countries to discuss global financial issues.