With an extra US$10 billion (Dh36.73bn) of federal money in its war chest and another $10bn on tap, Dubai has won some enviable breathing room for coping with the global crisis.
More than anything else, the decision by the Central Bank to lend the emirate $10bn provides what analysts and economists say is an unambiguous reaffirmation of federal support, something markets had been looking for amid growing concerns about Dubai’s ability to shoulder its $80bn debt burden. Most immediately, it appears to have dispelled any concern that Dubai and its corporate entities, or Dubai Inc, might be forced to default on any of the about $13bn in debt they have coming due this year.
“It’s positive for Dubai Inc. It shows that Dubai can get hold of financing at a difficult time and underlines the commitment of the federation,” said Charles Seville, associate director of sovereign and international public finance at Fitch Ratings in London.
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