Financial Future

Dubai Government insists, if not responsible for the debt and the chaos that occurs in Dubai World.

This statement was made following the assumption of debt creditors that the failure of Dubai Wold will receive a guarantee from the United Arab Emirates.

“The lender must share the responsibility for their decisions to lend funds to the company,” said Director General of Dubai Department of Finance Abdulrahman Al-Saleh, was quoted as saying by Reuters on Tuesday (1/12/2009). “They think that Dubai World is part of the government, it is not true,” he added.

In the first statement since the crisis began, Dubai World said, the Dubai government holding company controls it. Any debt restructuring will cost $ 26 billion and mainly affects the property companies, Nakheel and others. However, other companies, such as DP Wolrd, Jebel Ali Free Zone and Istithmar World, will not be included in the restructuring, because they are considered financially stable.

As reported, state-owned Government of Dubai, Dubai World, proposed a debt payment delays resulting shock waves in the global market. The price of shares in Europe and Asia fell, while the United States market (the U.S.) are protected because the closed Thanksgiving Day holiday.

Dubai’s debt crisis has the potential resolved. Abu Dhabi, the neighboring emirates of Dubai in United Arab Emirates federation, is ready to help the debt crisis experienced by Dubai. Only, Abu Dhabi richer states have oil reserves will cover all the debts of Dubai worth USD59 billion.

Commodity prices were to be dropped, including the weakening of oil prices up to five percent. Abu Dhabi become the foundation to help Dubai. Abu Dhabi control 90 percent of oil reserves in the United Arab Emirates, the country’s third largest oil exporter in the world. Abu Dhabi has a sovereign wealth funds (SWF) in the world with a wealth of USD700 billion.

With the number of Abu Dhabi could easily help the difficulties in the field of Dubai property. Constitutionally, each Emirate United Arab Emirates is a separate legal entity, but joined in the federation. Each Emirate has their own control over natural resources and finance. The federal government has no right to access resources or to guarantee the obligations of each Emirate. Trusted, Abu Dhabi would not be willing to cover all debts of Dubai. Abu Dhabi will sort out and will not help that Dubai company take its business model affected the global economic crisis.

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