Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, yesterday ordered government departments to transfer surplus revenues to the emirate's treasury. Sheikh Mohammed's directive also requires better control of public spending and transparency. "The law requires government departments that enjoy fiscal independence, as well as Government-related companies, to transfer surplus revenues to the public treasury as public revenues," the decree said.
The law is intended to regulate public spending "and control government revenues [and] provide an accurate database for revenues and expenditures". A Department of Finance spokeswoman explained that the change of law related to departments such as Dubai Municipality and the Roads and Transport Authority, and did not affect enterprises such as Dubai World, the Investment Corporation of Dubai or Dubai Holding.
Annual budgets will be controlled "from budgets received by Government and the public via investors, and for those entities that are fiscally independent and guaranteed by the Government", said the decree. Dubai officials have promised a new spirit of transparency and openness in their dealings with western financial institutions in meetings in Britain and the US. A delegation from the emirate, led by Sheikh Ahmed bin Saeed Al Maktoum and Mohammed al Shaibani, the chairman and deputy of Dubai's Supreme Fiscal Committee respectively, met financiers, government officials and opinion formers in London on Wednesday.
They then flew to Washington to meet Timothy Geithner, the US Treasury secretary, and other government officials before heading to New York for the final leg of the delegation's trip. They were accompanied in London by Alan Parker, the founder of the public relations firm Brunswick, and by an executive from Moelis & Co, the US investment bank advising the Dubai Government on the restructuring of Dubai World.
In London, the Dubai party met Lord Davies, the British business minister; Michael Geoghegan, the chief executive of HSBC; and bankers and businessmen. Among opinion formers, they met senior editors from The Times, Financial Times and The Economist. "They recognised the need to be more forthcoming and transparent in order to restore international confidence," one person at the talks said. Another said: " We appreciated the fact they made the trip to see us, but would have liked a bit more detail and perhaps some explanation of how it had all gone wrong."
For his part, Mr Parker deemed the meetings a success. "They were fantastic," he said. "They explained the restructuring process and the new bankruptcy laws. "All the corporates and bankers said they were pleased to see a new, different face of Dubai. They are modern, professional businessmen." Sheikh Ahmed, who is also the chairman of Emirates Airline, has been taking a more prominent role in the emirate's affairs since the announcement on November 25 that Dubai World was seeking a standstill agreement with its creditors over debts and liabilities later revealed to have a value of US$26 billion (Dh95.49bn).
He took the lead role in the announcement this week that Nakheel, Dubai World's property subsidiary, was able to meet the deadline to pay the $3.52bn sukuk, which had been regarded as a litmus test of the emirate's financial health. Mr al Shaibani has also emerged as an important architect of Dubai's recovery. As well as his position at the Supreme Fiscal Committee, he is also a close adviser to Sheikh Mohammed through his job as the chief executive of the Investment Corporation of Dubai. It is the Government-owned conglomerate that controls Emirates Group and the Dubai Electricity and Water Authority, among others.
The Dubai tour comes just days before a planned meeting between Dubai World and creditor banks to negotiate terms of a standstill and rescheduling of the company's $22bn of remaining debt, which includes bank loans and liabilities to contractors. The steering committee of six banks - four British and two from the UAE - will meet Dubai World on Monday. email@example.com