Dubai government companies raised their debt over the past year to an estimated US$93 billion, said the IMF, as it cautioned against a renewed borrowing binge.
Rising optimism about property prices and easier access to global liquidity could prompt a renewed cycle of risk taking by such companies, the fund warned. "In the absence of prudent policies, this could fuel short-term growth at the expense of medium-term stability," it said in a statement concluding its annual mission to the UAE.
Debt issuers in Dubai have ramped up bond sales this year after the emirate's credit risk dropped to its lowest since the global financial downturn in 2008. A $1.25bn bond and sukuk sale by the Dubai Government in January was followed last month by a $1bn bond by Emirates NBD, the emirate's largest bank.
It comes as the emirate rebounds from a debt crisis after Dubai World, the Dubai government-controlled conglomerate, restructuring $25bn in debt in 2011.
Dubai's stable of government-linked firms upped their debt over the past year to about $93bn, from around $84bn in March last year, said the IMF.
A recovery in property prices and an improving global economic backdrop have supported fresh borrowing, while enabling Dubai companies to restructure old debts and sell off assets acquired before the financial crisis. Dubai World sold a British logistics business, Gazeley, for an undisclosed sum, it emerged this week.
Bur Dubai's debt remained "substantial" at $142bn, about 102 per cent of GDP, the IMF said. Around $60bn of that amount fell due between this year and 2017, it said.
Forthcoming maturing debt next year included $20bn in Dubai government debt lent by Abu Dhabi and the Central Bank in 2009 as part of the Dubai Financial Support Fund. The cash was used to help companies struggling in the aftermath of the financial crisis.
Restructured debt related to Dubai World and Nakheel, the property company, will begin to mature in 2015 and 2016, the IMF said.
"While the Dubai Government and government-related entities have been actively looking at opportunities for debt refinancing, timely communication about these key maturities will be important to support market confidence," the statement said.
Continuing focus on improving the transparency of Dubai's government-related firms would be important to strengthen their resilience, it said.
Abu Dhabi had made "notable progress" in monitoring and making available data on the debt of government-linked firms through its debt management office.
But data availability on financial conditions, debt stocks and maturity profiles of Dubai's companies remained "inadequate" for an assessment of their financial health, the IMF said.
Dubai should establish a full debt management office tasked with overseeing such debt, the statement added.
Since the financial crisis Dubai had replaced the boards of directors of several of its companies and required new borrowing to be approved by the Supreme Fiscal Committee.
Building on such improvements, the IMF said key steps for further strengthening corporate governance included delineating clearly between their commercial and noncommercial operations and strengthening the role and independence of company boards to allow for more effective decision-making.
tarnold@thenational.ae
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UAE currency: the story behind the money in your pockets
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Countdown to Zero exhibition will show how disease can be beaten
Countdown to Zero: Defeating Disease, an international multimedia exhibition created by the American Museum of National History in collaboration with The Carter Center, will open in Abu Dhabi a month before Reaching the Last Mile.
Opening on October 15 and running until November 15, the free exhibition opens at The Galleria mall on Al Maryah Island, and has already been seen at the Jimmy Carter Presidential Library and Museum in Atlanta, the American Museum of Natural History in New York, and the London School of Hygiene and Tropical Medicine.
UAE%20v%20West%20Indies
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Landfill in numbers
• Landfill gas is composed of 50 per cent methane
• Methane is 28 times more harmful than Co2 in terms of global warming
• 11 million total tonnes of waste are being generated annually in Abu Dhabi
• 18,000 tonnes per year of hazardous and medical waste is produced in Abu Dhabi emirate per year
• 20,000 litres of cooking oil produced in Abu Dhabi’s cafeterias and restaurants every day is thrown away
• 50 per cent of Abu Dhabi’s waste is from construction and demolition
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
TEACHERS' PAY - WHAT YOU NEED TO KNOW
Pay varies significantly depending on the school, its rating and the curriculum. Here's a rough guide as of January 2021:
- top end schools tend to pay Dh16,000-17,000 a month - plus a monthly housing allowance of up to Dh6,000. These tend to be British curriculum schools rated 'outstanding' or 'very good', followed by American schools
- average salary across curriculums and skill levels is about Dh10,000, recruiters say
- it is becoming more common for schools to provide accommodation, sometimes in an apartment block with other teachers, rather than hand teachers a cash housing allowance
- some strong performing schools have cut back on salaries since the pandemic began, sometimes offering Dh16,000 including the housing allowance, which reflects the slump in rental costs, and sheer demand for jobs
- maths and science teachers are most in demand and some schools will pay up to Dh3,000 more than other teachers in recognition of their technical skills
- at the other end of the market, teachers in some Indian schools, where fees are lower and competition among applicants is intense, can be paid as low as Dh3,000 per month
- in Indian schools, it has also become common for teachers to share residential accommodation, living in a block with colleagues
What is Bitcoin?
Bitcoin is the most popular virtual currency in the world. It was created in 2009 as a new way of paying for things that would not be subject to central banks that are capable of devaluing currency. A Bitcoin itself is essentially a line of computer code. It's signed digitally when it goes from one owner to another. There are sustainability concerns around the cryptocurrency, which stem from the process of "mining" that is central to its existence.
The "miners" use computers to make complex calculations that verify transactions in Bitcoin. This uses a tremendous amount of energy via computers and server farms all over the world, which has given rise to concerns about the amount of fossil fuel-dependent electricity used to power the computers.
