Dubai total debt payments equal 20% of GDP for next 2 years

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Asset sales are still on the cards as Dubai Inc faces around $30bn worth of debt repayments over the course of the next two years, according to the latest research from a Saudi bank.

Samba Financial Group estimates that the emirate’s total government debt stands at $31.5bn – equivalent to 38 percent of GDP – over half of which has been taken out to support struggling government-related enterprises (GREs) such as Dubai World and Nakheel.

The bank has put the total sum owed by Dubai GREs at $77bn, and said that that debt remains a risk as the government may be pushed into absorbing further liabilities.

“Markets remain willing to finance the government which recently successfully issued another $500 million bond,” the research note stated.

“However, with total Dubai Inc repayments [government and GRE debt] exceeding $30 billion in 2011-12, restructuring, refinancing and new borrowing is unlikely to be sufficient and considerable amounts will still need to be raised through asset sales.”

Samba said that the government’s liabilities were manageable, but that the direct repayment burden was still large due to limited fiscal revenues of around $8bn a year, especially given the budget deficit of between $1bn and $1.6bn a year.

Direct government debt repayments (not including GRE debt) are set to spike at an estimated $20.6bn in 2014, when borrowings to fund GREs mature.

“Improvements in GRE finances will be key to the long term financial health of the emirate, and their repayment of the Dubai Financial Support Fund as planned is necessary to avoid the otherwise unaffordable spike in government repayments in 2014,” the report added. 

“However, it seems more likely that the government will extend repayments due and seek to roll over the $10bn notes held by the central bank, and possibly the financing from Abu Dhabi via its banks.”

The IMF recently warned that unless Dubai was able to increase its fiscal revenues, the debt-to-GDP ratio would rise to 47.4 percent next year, and to 60 percent by 2016.


Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Finance talk with RAKBANK

Finance talk with RAKBANK

StartUp sat down with RAKBANK’s head of personal banking, Ian...

Tips from the top: Hisham Al Gurg

Tips from the top: Hisham Al Gurg

High profile investor and entrepreneur Hisham Al Gurg discusses...

The hubsters' ecosystem

The hubsters' ecosystem

Tamara Pupic visits Impact Hub Dubai, the first local branch...

Most Discussed
  • 16
    Baby NOT on board?

    The people commenting here were all 20 years old when they were born, never cried, never screamed and never ran etc etc.

    Thursday, 21 August 2014 8:30 AM - Amer
  • 2
    European court backs French ban on full-faced veil

    well said John Harte, it is the total opposition to freedom of expression, it degrades and dehumanizes women into objects that need to be wrapped up and... more

    Friday, 22 August 2014 6:38 PM - Polly Nicoll
  • 1
    Damac says first Akoya Oxygen homes sell out 'in record time'

    You have to be desperate to buy anything from Damac and that in the furthest farthest outposts of Dubai Land. Stay near the main Drag the SZR! more

    Saturday, 23 August 2014 1:29 AM - Special K
  • 23
    World's most pierced man refused entry to the UAE

    Tolerance has its limits everywhere including Dubai and those who considered Dubai a lawless circus were held thank you Dubai authorities... more

    Thursday, 21 August 2014 10:51 PM - Khalil
  • 17
    UK looks to close tax loophole on expat landlords

    UK taxes too much and too complicated and time taking and confusing and continuous. Returns, lawyers, HMRC, taxes too much for too little. Not worth the... more

    Sunday, 17 August 2014 12:40 PM - AbdolRahman
  • 16
    Baby NOT on board?

    The people commenting here were all 20 years old when they were born, never cried, never screamed and never ran etc etc.

    Thursday, 21 August 2014 8:30 AM - Amer