Following Dubai’s jolting announcement on November 25 that it would seek a standstill on the debt of Dubai World, the emirate’s flagship holding company, the government has taken several steps to contain the fallout. But the event still has significant implications for the region, says IMF Middle East and Central Asia Department Director Masood Ahmed.
“The Central Bank’s announcement on November 29 to introduce a supplementary liquidity facility and to reaffirm that it stands behind banks in the United Arab Emirates has been very helpful, especially because these banks hold some of the Dubai World and the Dubai Government debt,” Ahmed said in a conference call with press.
Ahmed told reporters that Dubai World’s announcement to initiate a constructive engagement with its creditors and clarify the size and scope of the debt to be restructured had helped to reduce market uncertainty. In the November 30 statement, the company announced that it would restructure debt amounting to $26 billion—$6 billion of which is related to Nakheel, Dubai World’s real estate subsidiary.
Transcript of a conference call on Dubai by Masood Ahmed, Director of Middle East and Central Asia Department, IMF
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