DUBAI: The government of the financially troubled Dubai announced on Thursday a projected 2010 budget deficit of six billion dirhams ($1.63 billion/1.13 billion euros), or 16.9 percent of expenditure.
Income is projected at 29.4 billion dirhams (8.01 billion dollars), a 12 percent drop from 9.1 billion, the head of the department of finance, Abdulrahman Al-Saleh, said in a statement carried by WAM state news agency. Spending is projected at 35.4 billion dirhams ($9.63 billion), down 6.5 percent from last year’s 10.3 billion.
Al-Saleh said 30 percent of spending, or $1.9 billion, has been earmarked for investment expenditure “to upgrade and complete infrastructure projects.”
In past years, Dubai has channeled large sums of money into building a modern infrastructure, including a metro link and numerous wide highways.
Al-Saleh said the deficit represents just two percent of the gross domestic product of the emirate, whose economy had been hit badly by the global financial crisis, which crippled its once-booming and vital real estate sector.
Dubai also narrowly escaped a debt catastrophe last month. Its major state-owned Dubai World nearly defaulted on some of its debt, but was rescued by a last-minute lifeline of $10 billion from neighboring Abu Dhabi.
Dubai’s debt, mostly owed by its state firms, is around $100 billion.
Despite the crisis, Dubai inaugurated this week the world’s tallest tower which rose 828 meters (2,717 feet).
Known since construction began as Burj Dubai, the tower was renamed as Burj Khalifa, after the president of the United Arab Emirates, Sheikh Khalifa bin Zayed Al-Nahayan, who is also the ruler of Abu Dhabi.
Meanwhile, a consortium led by Japan’s Mitsubishi Heavy Industries has put the brakes on construction work on the Dubai Metro due to a disagreement over payments, one of the firms said Thursday. “We are slowing the pace of the construction for the purpose of negotiating the terms of contracts,” said Toshitaka Kawahara, a spokesman for Obayashi Corp., which is one of the constructors.
The consortium also comprises Mitsubishi Corp., Kajima Corp., and Turkey’s Yapi Merkezi.
A source close to one of the companies said that the construction work appeared to have been temporarily halted.
“It seems that the work has stopped on site,” said the source, who declined to be named.
A spokesman for Mitsubishi Heavy Industries said the work had “slowed down.”
Dubai’s Road and Transport Authority however denied Thursday that there has been a slowdown in construction or any delay in payments. “Construction in the project is ongoing as per the timetable. Work is progressing normally in various sites of the project,” the Authority said in a statement issued in Dubai.
It also reiterated its commitment to “contractual payment obligations in accordance with progress in construction.”
It said that one of the metro stations near Khalifa Tower, the tallest structure on earth, was opened only four days ago.
Dubai said in September that the cost of building the metro had nearly doubled to $7.6 billion, adding to the financial troubles of the Gulf emirate, which is battling a serious debt crisis.
The Japanese Nikkei business daily reported earlier Thursday that the consortium would suspend construction on the metro as early as Thursday due to a delay in payment from the Dubai government.
