Gov't jumpstarts lending to Dubai businesses

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MONEY LENDING: The first $10bn tranche of Dubai government's bond scheme has been earmarked for some of the emirate's largest companies.

Funds from the Dubai government’s $10bn bond will target Dubai World, Dubai Holding and domestic firms in the emirate's sovereign wealth fund's portfolio, the emirate's finance department head said on Tuesday.

A five-man fiscal committee, headed by Emirates airline chairman Sheikh Ahmed bin Saaed Al Maktoum, was established a month ago to assess the companies' requirements and decide how the funds would be used, Nasser Al Shaikh said in an interview on Tuesday.

"We will not wait to support the companies, there are urgent requirements that need to be dealt with quickly," he said.

"There is no free lunch; we will be helping companies on commercial terms."

Shaikh said the funds would begin flowing in the next few weeks and said non-bank financial advisors would help allocate the financing to avoid "conflict of interests."

Dubai secured $10bn from the UAE Central Bank a month ago for what will become a $20bn.

Ratings agency Standard & Poors believes the Central Bank will also provide the remaining $10bn when required.

Dubai property prices have been under pressure since late last year, when the global financial crisis and a slump in oil prices ended an economic boom in the Gulf region.

Hundreds of billions of dollars of expansion projects have since been suspended or cancelled in the UAE.

Dubai companies have laid off thousands of employees and UAE banks have been loath to extend new mortgage loans.

Local banks, including Islamic institutions, have also submitted proposals to the government to provide assistance to small and medium enterprises, Shaikh said.

"For us it's like driving a car with poor visibility: We can only see 10 to 15 meters ahead," he said.

"We will have to revisit our plans and stay focused on the short-term challenges."

Emaar Properties, the largest listed UAE property developer, has not held discussions with the government as it "believes it can handle it (the situation)."

The government is also set to appoint an international PR firm as part of its plans to collate all Dubai's economic data on the web.

"We are working on improving the economic data," Shaikh said. "There are different reasons for rumours in Dubai but once the information is out there it will kill them. (Reuters)

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