DUBAI: Dubai needs no more support from the United Arab Emirates central bank and conditions in the banking sector have improved, a senior official from the debt-laden Gulf emirate said on Wednesday.
Dubai’s debt problems damaged the UAE banking sector, slowing down the economic recovery. The emirate still faces a challenge to pay off tens of billions of dollars worth of debts mainly in state-owned companies over the next few years.
"No more support is needed for Dubai from the central bank," Ahmed Humaid al-Tayer, a member of the Dubai Supreme Fiscal Committee and Dubai International Financial Centre governor, told reporters on the sidelines of a financial conference.
"The federal government has supported banks and there were good results for the banking sector, liquidity and capital adequacy," he said.
Last year, the UAE central bank subscribed to half of a $20 billion Dubai government bond program. The oil-producing emirate of Abu Dhabi and its banks provided the rest after problems at state-owned conglomerate Dubai World surfaced last November.
The UAE government and the central bank have also taken a range of steps to raise capital and support liquidity in the banking sector since the global crisis hit in 2008.
Concerns over Dubai’s ability to pay debts in its companies eased partly after Dubai World reached a deal to restructure almost $25 billion of liabilities earlier this month.
However, some of the emirate’s state-linked firms still face problems paying off debt. The Gulf Arab emirate and its affiliated firms are estimated to have more than $100 billion in debt.
Tayer also said he expected the UAE’s nominal gross domestic product to exceed 1 trillion dirhams ($272 billion) this year.
This would imply growth of at least 9.4 percent in nominal terms this year, according to Reuters calculations, after a contraction of 2.1 percent in 2009.
"The majority of the economy is doing well. There is growth in the trading sector, exports, tourism," Tayer said. Analysts polled by Reuters expected the economy of the world’s third largest oil exporter to expand by 2.1 percent in real terms this year, the slowest pace in the Gulf.
The government sees growth in a range of 2.0-3.2 percent depending on crude prices.
The market differs from the government in estimates of the last year’s GDP performance in inflation-adjusted terms, with a consensus for a contraction of 1.4 percent. The government says real GDP grew by 1.3 percent in 2009.