Dubai World announced to suspend debt payments last Wednesday, and the global investors' attention was focused on this piece of hot spot in the Middle East. The data shows UAE has got a great deal of debt due and Dubai crisis is just a tip of the iceberg.Vintage-Inspired: Magnificent Jewelry
In the next few years, Dubai will continue to face debt pressure.April Fools' Day Gift Ideas for Children
According to the evaluation of Bank of America Merrill Lynch, the United Arab Emirates` total debts up to the end of 2009 are184 billion dollars. Moreover, they`ll have a large sum of debts coming due before 2013. In the latest issued report, Bank of America Merrill Lynch stated the debt crisis of Dubai is lacking in transparence because not all the official data from Dubai has been released. These uncertainties will greatly raise the risk premium of debt guarantee. And the restructuring plan declared by Dubai World is likely to cast gloom over the economic recovery prospect.Pretty christian louboutin shoes are One of Most Eye-Catching Craze in This winter
The report shows that currently the debt exposure in the UAE has not been fully revealed and the debt payment is problematic. In the $184 billion debts of UAE, Dubai owes $88 billion and Abu Dhabi owes $90 billion. Bank of America Merrill Lynch says that apart this year's 88 billion U.S. dollars of debt, there are still nearly 500 million of debts will be due in the next three years in Dubai. It`ll have about 12 billion US dollars coming due and in 2011 and 2012, they are respectively 19 billion US dollars and 18 billion dollars. Analysts expect the total debt in Dubai is $26.5 billion, the 80% of which is needed to repay in the next 3 years. The cost of debt turnover is possibly even higher than the figures estimated because these figures merely include principle reimbursement levels.
UAE central bank takes an active attitude.
In order to calm down the panic due to the credit crisis, the central bank of the United Arab Emirates in Abu Dhabi expresses that they are preparing to promote additional cash flow to be the backup force of every bank. Central bank announced in the statement that it has send the notice to each bank to which can received additional liquidity tool on special arrangements of current account. However, the interest rate is more than the interest rate of 3-month inter bank in the UAE by 50 basis points.
The UAE economist Johan Sfakianakis said that the action was mainly to restore the confidence of investors from all over the world in order to prevent the panic being magnified. But he added that Dubai wasn't mentioned in the statement, nor the scale and value of this arrangement was specified by the central bank.
In response to the public's suspect and speculation, officials of Dubai and Abu Dhabi denied there are grudge borne between them. Also said that the discussion of the financial support of Dubai has been discussed between the central bank and Ministry of Finance and other federal agencies .
Now the public and investors' focus was chiefly on how Abu Dhabi will act because it is the capital provider of UAE's central bank as well as the key element in ensuring Dubai's financial health.