Federal National Council passes draft Public Debt Law that will also limit debt of state-owned entities.
The UAE has moved to reduce public debt and limit state-owned companies' exposure to the debt market after the Federal National Council (FNC) enacted the Public Debt Law.
According to the public debt draft law passed by the FNC, the total value of the country's public debt should not be more than 45 percent of gross domestic product or AED300 billion ($82bn), whichever is the lower figure at the time of issuing the public debt bonds, news agency WAM reported.
A federal public debt office will be set up at the Ministry of Finance while each emirate will also set up a public debt office under the new legislation.
The move comes at a time when governments across the region are taking a stock of their exposure to the market, while many government entities are trying to raise capital to fund expansion, UAE daily Gulf News reported on Thursday.
A recent report by Bank of America and Merrill Lynch estimated that the UAE's total debt obligations were $142 billion, of which $24 billion was due for repayment this year.
Total assets of Dubai amounted to AED1.3 trillion, far outweighing its debt of $70 billion, although higher than its GDP of around $55 billion, putting the emirate in a comfortable financial position. The government has already raised $10 billion through a bond, the paper added.
According to the draft law, "no government entity is allowed to issue bonds without Cabinet approval. The application should state the amount of the issue of loan bonds or sukuk, the purpose of the issue, financial resources or investment earmarked for repaying the incurring debt".