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IMF not concerned about Dubai's ability to repay debt

The International Monetary Fund said it is not worried about Dubai's ability to meet its financial obligations after the emirate that almost defaulted in 2009 successfully managed to reschedule payments.

The International Monetary Fund said it is not worried about Dubai's ability to meet its financial obligations after the emirate that almost defaulted in 2009 successfully managed to reschedule payments.

"So far the government-related entities have managed debt rescheduling from 2009 quite successfully," Masood Ahmed, the head of the fund's Middle East and Central Asia department, said.

Dubai's government redeemed a Dh3.3 billion liability that matured in April, and three state-linked companies paid or refinanced US$3.75 billion of debt last year, bolstering investor confidence.

Dubai and its entities spent about $113bn to transform the emirate into a tourism and commercial hub, according to IMF estimates. The government has $26bn of principal payments outstanding on bonds, including $17.93bn maturing next year, data compiled by Bloomberg show. Moody's said in March that Dubai faces a "pivotal year" in 2014.

"Debt levels in Dubai are still quite high at about 100 percent of gross domestic product," Mr Ahmed said.

The emirate's economic growth may accelerate to 4 per cent this year as the construction and logistics industries revive, Mr Ahmed said. Dubai should take steps to avoid "another boom-bust cycle" in property, he said.

 

* Bloomberg News

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