The Dubai government reduced the public debt by about Dh29 billion ($7.9 billion) to reach 25 per cent of the emirate’s domestic product in a year and a half, a Dubai Media Office statement said on Tuesday.
The achievement has been reached within 16 months of the establishment of the Public Debt Management Office (PDMO), under the Dubai Department of Finance (DOF), in May last year.
“Despite ongoing global economic challenges, DOF not only achieved financial efficiency for the government of Dubai but also seized opportunities from adversity,” said Abdulrahman Al Saleh, director general of DOF.
He added the department had been able to "achieve rational spending on projects, improve and diversify revenue and optimise the use of financing instruments".
"This has facilitated the fulfilment of government financial obligations according to the scheduled dates, in addition to accelerating the fulfilment of some other obligations,” Mr Al Saleh said.
The reduction in debt will be achieved across all classes in the government debt portfolio, the media office said.
This includes a full redemption of sukuk certificates worth Dh3.3 billion, the repayment of bilateral and syndicated facilities totalling Dh5.2 billion and a partial settlement of Dh20 billion from the financing extended by the Abu Dhabi government and the UAE Central Bank, it said.
The debt management office is responsible for diversifying the emirate's funding sources and meeting its financing requirements. It is also in charge of managing the sovereign debt portfolio.
Set up to regulate public debt in Dubai, the debt management office was mandated to set strategic objectives and policies, evaluate risks to ensure government financial sustainability, maintain transparency to enhance investors’ confidence and develop relationships with all stakeholders.
Debt burden of Dubai's government as a share of the emirate’s GDP will fall this year as its economy will continue to grow robustly despite global macroeconomic headwinds, S&P Global Ratings said in a report in May.
Dubai's gross general government debt is expected to drop to 51 per cent of its GDP this year from a cyclical high of 78 per cent in 2020, the rating agency said in its report on the emirate's economy.
“PDMO launched its Public Debt Sustainability Strategy programme for 2022-2024, marked by the successful implementation of various strategic initiatives aimed at enhancing the efficiency of the public debt portfolio," said Rashed Al Falasi, PDMO's chief executive.
"The objectives include reducing borrowing costs, mitigating refinancing risk and ensuring the government’s financial stability in the medium term.
"The programme also aims to shape robust public financial policies and foster confidence among investors and financial institutions through maintaining a high level of transparency and credibility."
He said one of the pivotal goals realised through debt repayments was the "substantial reduction of public debt levels", resulting in a "significant boost" to government financial liquidity and preparedness to meet any funding requirement, as part of its commitment to strategic projects and initiatives such as Dubai Urban Plan 2040 and the Dubai Economic Agenda (D33).
The public debt-to-GDP ratio now stands at a "safe and conservative level of 25 per cent", Mr Al Falasi said, comparing it with international thresholds that typically range between 40 per cent and 60 per cent.