DUBAI- Mohamed Ali Alabbar, a member of Dubai's Executive Council and chairman of Emaar Properties, has dismissed speculation that Dubai is in discussions to sell off some of its assets to cover its debts as 'absolutely untrue.
"The Dubai government can, and will, meet all its debt obligations, Mohamed Ali Alabbar, a member of Dubai's Executive Council and chairman of Emaar Properties said yesterday (Monday), highlighting Dubai's strong financial position by sharing some key balance-sheet figures, including that total sovereign and affiliated company assets are more than $350 billion, while total debts are $80 billion.
In response to an ongoing media debate regarding Dubai's ability to finance its debt obligations, Alabbar said, "Let us put an end to this speculation ... and let me state categorically, that the government can, and will, meet all its obligations going forward; so please have no doubt about this fact."
Alabbar said that Dubai's current sovereign debt obligation is $10 billion, while initial estimates put sovereign assets at approximately $90 billion, excluding major elements such as the city's two airports; its metro system, which is currently under construction; bridges, and the healthcare system. A full valuation of sovereign assets currently is under review.
Alabbar, who also is chairman of a Dubai government committee to help the emirate manage the impact of the global financial crisis, said that all of the sovereign debt is being used to finance long-term, "risk-free" infrastructure development and government institutions and state-owned companies that have positive cash flows and strong long-term value - "not to fund current state expenditures, consumption or subsidies".
Alabbar said that were any sovereign-affiliated companies to require financial support, the government would step in. "If the need arises. Yes we will."
Observing that Dubai has witnessed sustained double-digit growth of 14 percent for the past several years, he said, "if growth is just six, seven or eight percent, it gives us a chance to take a breather, since we've been running for a long time."
Rumours are rife that Dubai has been in talks with the government of Abu Dhabi about it buying some of the emirate's assets, and he pointed to speculation over the future of both Emaar and Emirates airline, and the 'confusion' over how much Dubai owes and how it will finance that debt, stating: 'The government has not sold a thing and will not sell a thing.'
"The formation of the Advisory Council is an extremely significant initiative undertaken by the Government of Dubai, under the guidance of Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and ruler of Dubai, to ensure the long-term growth and stability of a range of sectors of economic activity in the emirate," said Alabbar, who has been nominated to head the Council.
The Council will be rapidly addressing the current global challenges and their impact on a range of areas, including Government finances, real estate, banking and equity markets.
Among the Council's first activities has been to actively manage the current and future supply of new projects onto the emirate's real estate market to ensure equilibrium in the sector. Pointing out that the three largest Dubai-based real estate developers account for approximately 70 per cent of supply, Alabbar said that the Council is acting in full cooperation with them as well as private developers in the emirate.
Meanwhile, In response to the media reports yesterday, a spokesperson for The Advisory Council of the Government of Dubai clarified that Emaar Properties and Nakheel are not considering any merger plans."
The DIFC Forum, that opened yesterday (Monday) is discussing critical issues like the impact of the global financial crisis on the region, the next generation of Islamic Finance, emerging markets in and after the financial crisis, and energy geopolitics in an era of structural change.
