By Claire Ferris-Lay
Bailout fund to offer loans, credit facilities to non-government firms, says Dubai ruler
financial support fund, set up to help state-backed companies pay back debt,
will now offer aid to non-government entities as the emirate continues to
battle a debt crisis.
The Dubai Financial Support Fund “will grant loans and
credit facilities to government and non-government entities," according to
a statement posted on the website of Dubai Ruler Sheikh Mohammed Bin Rashid
Al-Maktoum on Sunday.
Any entity that "wishes to benefit from the fund should
submit all necessary assurances to honor their obligations to the fund,” the
was launched at the height of the emirate’s debt woes in 2009, after
state-backed conglomerate Dubai World roiled global markets by announcing plans
to delay $24.9bn in debt.
The glitzy Gulf Arab emirate needed a last-minute $10bn
bailout from neighbour Abu Dhabi and has been busy restructuring key
state-linked firms' debts.
The change in law will allow the fund to issue “permits,
bonds and any other financial instruments, on behalf of the government, within
Dubai and beyond so as to provide financial liquidity necessary to finance
projects" the statement said.
The fund may also "invest in commercial projects,
establish investment funds and manage commercial institutions and companies
independently or jointly,” it said.
The fund may need as much as $2.4bn extra by 2012 to pay off
maturing liabilities, JPMorgan Chase said in February.
Dubai last month said it would raise $800m in financing
backed by road-toll receipts to help fund transport projects in the emirate.
The government aims to cut spending this year in a bid to shrink its budget
deficit and forecasts a gap of AED3.78bn ($1bn) for the year, down from AED5.99bn
projected for 2010, it said in January.
Hope main part of the loan goes to the developers to pay off the small investors like us for the cancelled and / or not completed projects on due date. This not only brings back some confidence in the market but such payment would be re-invested in purchasing the residential unit to stop paying rent. Presently we have similar case with DAMAC, DEYAAR, RUFI and LBI developers.