“Borrow and Build” Catches up with Dubai and the Bankers……….
“Dubai's government has ordered its departments to cut spending by 15% to save 3.7 billion U.A.E dirhams ($1 billion), with the aim of reducing the emirate's deficit of AED5.99 billion, the finance departmentfinance department said Monday. The once booming city-state has been hit hard by a regional property slump that has seen prices fall as much as 50% since their peak in late 2008. Dubai's mountain of debt has also prompted a series of bailouts by oil-rich neighbor Abu Dhabi. Dubai is currently preparing a medium term budget plan for 2011-2013, a finance department spokeswoman said in an emailed statement. Government departments are looking to cut costs and expenses without affecting the quality of services, she added………. "It is not a small amount, and we could see similar cuts taking place in the future." Dubai's shock confession in November that one of its largest government-owned conglomerates, Dubai WorldDubai World, was in need of a freeze on about $26 billion of debt roiled global financial markets and prompted many analysts to question the city's economic model of borrow and build. People familiar with the matter told Zawya Dow Jones last month that one potential offer being considered in the Dubai WorldDubai World debt-restructuring talks was a repayment offer of 60 cents on the dollar, paid back after seven years, but backed by government guarantees. Lenders would receive no interest……..”
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