UAE and Abu Dhabi to the rescue: How Dubai was bailed out
The UAE Central Bank and Abu Dhabi came to Dubai's rescue as it struggled in the face of the global financial crisis
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The U.A.E. central bank and the Abu Dhabi government bailed out Dubai with $20 billion of loans after the city-state that became synonymous with skyscrapers and man-made islands roiled the global financial markets in late 2009 with a multi-billion-dollar debt restructuring at one of its flagship conglomerates.
Dubai had drawn on about $8.45 billion of the $10 billion Abu Dhabi facility due to mature in 2014, according to the Dubai government's bond prospectus dated June 2011.
"We are on track to pay back Abu Dhabi... there is a date and we will meet the deadline for sure...in a couple of years," Mohammed al Shaibani, the chief executive of Investment Corporation of Dubai, told reporters at an event in Dubai on Sunday.
Dubai's economy was under pressure as its key real estate sector went from boom to bust in the wake of the global financial crisis in 2008, but there are signs of recovery now--especially in the property market, which Mr. Shaibani expects will fully recover in three years time.
"Though we are not much immune from what is happening around us...we think we will be doing quite well in the coming period. The economy is strong, while the challenges that are happening will fade away, it just takes a bit of time," he said.
Mr. Shaibani, who is also director general of Dubai's Rulers Court and a member of the emirate's Supreme Fiscal Committee, added that government related entities, or GREs, were managing their own business and meeting their obligations on time and that they needed no government bailout.
In terms of the issuing more bonds, Dubai's government has no immediate needs, according Mr. Shaibani. "Any issuance would be based on need requirement, and not to move the market or any other purpose."
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