Dubai's ruler has amended a law to allow the emirate's $20 billion (Dh73.4bn) fund to offer loans to non-government entities.
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The Dubai Financial Support Fund "will grant loans and credit facilities to government and non-government entities," according to a statement posted today on the website of Sheikh Mohammed Bin Rashid, Vice President and Prime Minister of the UAE and Ruler of Dubai. Any entity that "wishes to benefit from the fund should submit all necessary assurances to honour their obligations to the fund," it said.
Dubai set up the fund in July 2009 to help state-owned companies after the global financial crisis froze credit markets hitting the property market. The emirate raised $10bn by selling bonds to the UAE's central bank in February 2009. It also raised another $10bn from bond sales to Abu Dhabi government and state-controlled banks to complete the fund, which was set up with advice from Rothschild & Sons.
The amendment allows 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" to meet government and non-government obligations, according to today's statement. The fund may also "invest in commercial projects, establish investment funds and manage commercial institutions and companies independently or jointly," it said.
Dubai World, one of the emirate's three main state-controlled holding companies and property developer Nakheel PJSC have received money from the fund. Dubai World signed a final agreement with its creditors in March to restructure about $25bn of debt.
Dubai last month hired four banks including Citigroup to 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 Dh3.78bn for the year, down from Dh5.99bn projected for 2010, it said in January.
Bloomberg News