Dubai says can handle debt maturities, trade with Iran

Emirate won’t cut long-standing trade ties with Iran, says DED director general
Dubai says can handle debt maturities, trade with Iran
Dubai, which has an estimated $115bn in debt, can meet its liabilities, said Sami al-Qamzi, director general of Dubais Department of Economic Development
By Reuters
Thu 31 Mar 2011 07:54 PM

Dubai can handle upcoming debt maturities, shaking off the
impact of regional unrest, and is working "hard" to prevent
violations of UN sanctions on Iran, a government official said.

Concerns about the emirate's total liabilities, estimated at
around $115bn, or 144 percent of GDP, have eased after state-owned Dubai World sealed
a deal last September to restructure almost $25bn of debt.

But worries persist about the ability of Dubai and its
companies to repay some of their bonds and loans worth billions of dollars over
the next four years.

The UAE member, which was heavily hit by the global downturn
and local debt crisis, could deal with its debt maturities, Sami al-Qamzi,
director general of Dubai's Department of Economic Development (DED), said
Wednesday.

"The challenge we face in our economy is pushing the
real estate sector to grow and catch up with other sectors," he said.
"We need to develop policies ... to encourage growth in the sector."

The construction sector shrank by 19.5 percent in real terms
in 2009, while the real estate and business sectors plunged by 19.8 percent.
Both sectors account for about a quarter of Dubai's economy, which does not
benefit from the oil wealth of some of its neighbours.

The trade, logistics and tourism sectors are seen helping
lift growth in the emirate this year, which accounts for almost a third of the UAE’s
gross domestic product and for around 80 percent of its non-oil trade.

The chief economist at the DED also said on Wednesday Dubai's
economy should grow by up to four percent this year helped by a recovery of
trade and logistics sectors.

Asked about the impact on Dubai of regional unrest, which
toppled leaders of Egypt and Tunisia, threatens the Libyan regime, and spread
to Gulf countries including Bahrain, he said: "Dubai's government economic
policy has always centred around attracting foreign investment and developing
the tourism sector, and I think many observers say these sectors have somewhat
benefited from what's happening around us."

There have been no signs so far of protest in the UAE.

Dubai's economy is expected to have grown by around 2.2
percent in real terms in 2010, emerging from a 2.4 percent contraction the
previous year, the emirate's statistics office said in March.

The emirate's ties with Iran, which have long drawn scrutiny
from the United States and Western nations, would not be cut due to UN
sanctions, Qamzi also said.

There have been four rounds of UN Security Council sanctions
to punish Iran for failing to halt its uranium enrichment and address questions
about its activities by the International Atomic Energy Agency.

The United States, and some of its allies, believe Iran is
pursuing atomic weapons under the cover of its civil nuclear programme. Iran
denies this, saying the programme is aimed at generating electricity so it can
export more oil and gas.

"The trade [between Iran and the UAE] has happened for
the last 100 years, it is difficult to come and stop it suddenly," Qamzi
said.

"But what we want to be sure of is that we are working
in line with the government with the UN resolution and we are working hard
against any violation of the resolution. There is an impact, but I hope that
the impact will not be severe."

The Islamic Republic ranks second among Dubai's re-exporting
trade partners, accounting for 17 percent, followed by Iraq with 5 percent.

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