Dubai denies talks with federal gov't over funding

UNDER CONSIDERATION: Dubai has denied it is in talks with the federal government to set up a fund for state-owned companies. (Getty Images)

Dubai is not in talks with the UAE federal government to create a state-funded loan facility to help firms facing tight borrowing conditions, a government official said on Wednesday.

Nasser Al-Shaikh, director-general of the Dubai Department of Finance, made the remarks at a business luncheon where he discussed details of a new panel aimed at tackling the impact of the financial crisis on the emirate's economy.

His comments come after the UK's Financial Times reported late on Tuesday that Dubai was in talks with the federal government to secure funding for state-owned companies as credit markets dry up amid the global financial crisis, citing unnamed officials.

The plan, one of a number being considered, would see a fund set up similar to the 120 billion-dirham ($32.6 billion) facility made available to bank in the UAE last month, the FT claimed.

The global financial crisis and tightening credit markets have made it much more expensive and difficult to borrow in recent months, focusing attention on companies' ability to refinance outstanding debt.

Particular attention has fallen on Dubai, where many state-owned companies are highly leveraged and there are not large oil reserves.

Industry estimates have put Dubai's external debt to be around $70 billion, more than double its annual GDP.

But Dubai officials maintain the emirate has enough money to refinance its debt, with Dubai International Capital (DIC) CEO Sameer Al-Ansari saying earlier this month Dubai's debt was "manageable".

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