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Dubai to reduce public debt by Dh29 billion

Emirate will also make a partial settlement of Dh20 billion loan from the Abu Dhabi government, UAE Central Bank

Published: Tue 26 Sep 2023, 7:22 PM

Updated: Tue 26 Sep 2023, 8:55 PM

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Dubai government on Tuesday announced a reduction of approximately Dh29 billion in the public debt by the end of this year, including partial settlement of Dh20 billion loan extended by the Abu Dhabi government and the Central Bank of the UAE.

The public debt-to-GDP ratio now stands at a safe and conservative level of 25 per cent, while internationally recognised thresholds typically range between 40 and 60 per cent, underscoring Dubai's prudent fiscal management.

The Public Debt Management Office of the Government of Dubai's Department of Finance said this has been achieved within a year and a half since the establishment of the Office in 2022, thanks to the government's ongoing commitment to responsible financial management and long-term fiscal sustainability.

The region's largest financial centre's economy grew at a good pace of 2.8 per cent year-on-year in the first quarter of 2023 to Dh111.3 billion, led by strong growth of all the key sectors, including transportation and storage and finance and insurance.

As part of Dubai Economic Agenda 'D33' launched earlier, the emirate aims to position itself among the top three global economic cities and double the size of the economy to Dh32 trillion over the next ten years.

The public sector revenues have increased on the back, increased tax revenues and faster growth of the local economy.

The Public Debt Management Office was established under the directives of Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council of Dubai, and under the supervision of Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, and Deputy Prime Minister and Minister of Finance of the UAE.

Debt reduction across all portfolios

It said the public debt would be reduced across all debt classes in its debt portfolio, including a full redemption of Sukuk certificates worth Dh3.3 billion, the repayment of bilateral and syndicated facilities totalling Dh5.2 billion, and a partial settlement of Dh20 billion from the financing extended by the Abu Dhabi government and the Central Bank of the UAE.

"Despite ongoing global economic challenges, the Department of Finance not only achieved financial efficiency for the Government of Dubai but also seized opportunities from adversity," said Abdulrahman Saleh Al Saleh, director-general of the Department of Finance.

"The support received from the leadership has enabled us to achieve rational spending on projects, improve and diversify revenues, and optimise the use of financing instruments. This has facilitated the fulfilment of government financial obligations according to the scheduled dates and accelerated the fulfilment of some other obligations."

Rashed Ali bin Obood Al Falasi, PDMO's Chief Executive Officer, said the Public Debt Management Office launched its Public Debt Sustainability Strategy (PDSS) programme for 2022-2024 to enhance the efficiency of the public debt portfolio. The objectives include reducing borrowing costs, mitigating refinancing risk, and ensuring the Government's financial stability in the medium term.

"The programme also aims to shape robust public financial policies and foster confidence among investors and financial institutions through maintaining a high level of transparency and credibility," he said

Al Falasi pointed out that reduction in public debt reduction is resulting in a "significant boost to government financial liquidity and preparedness to meet any funding requirement, as part of its commitment to strategic projects and initiatives such as Dubai Urban Plan 2040 and the Dubai Economic Agenda (D33)."

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