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Fri 10 Oct 2008 03:02 PM

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Dubai denies problems refinancing debt

Refinancing more costly, but gov't has funds to meet repayments - official.

The Dubai government has denied it will have problems refinancing billions of dollars it has borrowed to fuel the emirate's economic growth.

Director-general of the government's finance department Nasser Al-Sheikh Dubai said in comments published on Thursday that although refinancing was becoming more expensive Dubai had enough funds to meet repayments.

"Sure, it will be challenging and more expensive, but as we stand today we are well positioned to deal with the next seven quarters and pay off the current debt in place," Al-Sheikh told the UK's Financial Times.

As the global financial crisis and credit crunch has escalated, Dubai's credit default swaps, contracts used to insure against the default of financial instruments such as bonds or corporate debt, have soared.

Analysts have begun to question whether Dubai's government agencies and state-controlled companies will be able to meet refinancing arrangements as costs spiral.

Al-Sheikh told the newspaper international markets were exaggerating default risk in the Gulf.

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