Abu Dhabi gives Dubai $10bn to cover Dubai World debt
The Abu Dhabi government and the UAE Central Bank are to provide $10bn (£6.13bn) to the Dubai Financial Support Fund to help Dubai World meet its immediate financial commitments, including the repayment of a $4.1 billion Islamic debt which matures today.
According to a source close to the Dubai government, the UAE central bank will also inject liquidity as needed into banks that face exposure to Dubai World as part of the arrangement.
In an official statement, Chairman of the Dubai Supreme Fiscal Committee, Sheikh Ahmed bin Saeed Al Maktoum revealed that the governments of Dubai and Abu Dhabi had been working closely together with the UAE Central Bank and confirmed:
“The government of Abu Dhabi has agreed to fund $10bn to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World.”
He continued: “We are here today to reassure investors, financial and trade creditors, employees, and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices”.
In his statement, Sheikh Ahmed also provided assurance that despite the restructuring of the Dubai World debt, Dubai would “continue to be a strong and vibrant global financial centre”.
“Our best days are yet to come. The Government of Dubai remains committed to its high standards and its obligations. We are confident in our economic model, and we are confident in the long-term health and outlook for our economy” he added.
News of the support from Abu Dhabi has boosted share markets in the UAE, with Dubai’s main index rising by 10% and Abu Dhabi’s by more than 7%.
Further afield, the news has also had a positive impact on the value of the euro and the pound and UK shares have rallied; the London Stock Exchange, Standard Chartered and Royal Bank of Scotland, the UK stocks viewed as most exposed to Dubai World, were the top three performers in the London market this morning.
This important show of support from Abu Dhabi to its neighbour will help to boost confidence in Dubai that was inevitably shaken following news of the restructuring of Dubai World. Furthermore, it serves to reinforce the strength and sustainability of the UAE as a whole.
Source: BBC News, Arabian Business and The Times