Dubai’s debt-to-GDP ratio low: DIC

Dubai’s debt is manageable and is far lower if compared to the debt-GDP ratios of other developed countries such as the UK, Germany and the US, according to Sameer Al Ansari, Executive Chairman and Chief Executive Officer of Dubai International Capital. In his remarks to the Leaders in Dubai forum yesterday, he said the resources are guaranteed to pay the emirate’s debt obligations, which are variably estimated at $47billion (Dh172bn) to $70bn. “The next years will be better as all the resources are there for repayment. A lot of those debts are from companies with commercial operations that are extremely successful and very profitable and with strong cash flows,” he said. According to Al Ansari, compared to other countries, “Dubai’s debt to GDP is one is to one and the UAE’s debt to GDP is one-third of the GDP. In the UK, debt is five times compared to GDP, in Germany it is three times, in the US it is three and a half times.” Al Ansari’s remarks complement Emaar Chairman Mohamed Alabbar’s recent statement in the World Economic Forum that the Government of Dubai is fully covered to service its debt for the next seven quarters. Experts at the forum exuded optimism that the Gulf will continue to grow, albeit at a slower rate, indicating that GCC is not in a crisis. “Do you even know the real picture? We are receiving winds of contagion from the West but we do not have the crises that are swirling Wall Street. The important thing is to look at profitability and the balance sheets of the banks and they will appear. If you want to disregard the profits made by the banks and focus on the negative side, it is not fair. We will weather this. This is not being self congratulatory but there is no point in looking at a glass which is half empty,” said Dr Muhammad Al-Jasser, Vice-Governor, Saudi Arabian Monetary Agency. “Let us not forget Dubai is the financial, commercial, trading, logistics and tourism sector for the whole region. The region has strong fundamentals and Dubai will continue to be at the epicentre of the region’s prosperity,” Al Ansari said. “Dubai’s success is commercial, using leverage and foreign investment,” he added. “Some of you would remember that in the 1960s the Ruler borrowed heavily from Kuwait to dress the Creek and set Dubai to be the international logistics centre. “Dubai has always been bold and has always been taking uncertainty to its advantage, providing a safe haven in the region for the region.” Earlier, investment bank EFG-Hermes said as a ratio to the emirate’s fiscal revenues, it saw little to suggest the debt level was either unmanageable or unsustainable. Karen Remo-Listana