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Fri 26 Mar 2010 09:15 AM

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'Where will Dubai's $3.8bn shortfall come from?'

Dubai announcement signals gov't 'is prepared to assist the market' - analyst.

'Where will Dubai's $3.8bn shortfall come from?'
(Getty Images - for illustrative purposes only)

According to the Dubai World statement released by the Dubai Government on Thursday the $9.5bn in new funding to restructure Dubai World's debts will be made up of $5.7bn left over from the previous loan from Abu Dhabi and the remainder will come "from internal Dubai Government resources".

However, where this remaining $3.8bn is going to come from is uncertain, a Dubai-based analyst told Arabian Business.

"This is the big issue with Dubai," said Tudor Allin-Khan, chief economist at HC Brokerage in Dubai.

"I don't know where the [$3.8bn] is going to come from. Is it money that is already there or will it come from the Sheikh I don't know?"

However, Allin-Khan said that while it was uncertain it not a worry as he believes the "money is available" and that "there is a lot of money in this country."

Earlier this year, Dubai ordered government departments to cut spending by 15 percent in order to save about $1bn and narrow the emirate's budget deficit and Allin-Khan said he believes this was one of the ways the Dubai Government will raise the $3.8bn.

He predicted that a rise in oil prices and the strengthening of the US dollar, which the UAE dirham is pegged to, will help the situation. He also forecast that some of Dubai World's lucrative assets, such as the QE2 cruise liner, would probably be sold off to finance the new funding required.

However, he concluded that the announcement as a whole signaled that the Dubai Government "is prepared to assist the market."

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debbie 10 years ago

where the money will come from! is he a creditor? so why is he worried?

DXBEXPAT 10 years ago

It isn't your business either, but you're still reading the article & commenting, ain't you? :)