Dubai said Monday it will repay in full $4 billion of debt maturing later this month from internal sources, as the Gulf emirate’s economy grows steadily after being severely hit by the global crisis.
The Investment Corporation of Dubai (ICD), which is the investment arm of the government of the city state, will cover the obligation “from internal sources derived principally from cash dividends received from ICD’s operating subsidiaries,” the government said in a statement.
“This substantial repayment is the result of our strong portfolio of diverse and successful companies across Dubai, as well as the underlying strength of our economy,” said Mohammed al-Shaibani, ICD chief executive officer.
“Dubai is witnessing a recovery and remains a stable financial centre. The Emirate continues to be an attractive destination for business, tourism and trade and has proven its resilience in recent times,” he said.
The $4 billion obligation, which falls due on August 21, is part of a $6 billion facility, the remainder of which becomes due on August 21, 2013. The three-year tranche comprises $2.5 billion of conventional loans and $1.5 billion of Islamic financing.
ICD’s portfolio includes notably investments in Emirates — the largest airline in the Middle East, ENBD and DIB banks, property giant Emaar, DUBAL aluminium company, and Borse Dubai.
Dubai sent jitters throughout global market in November 2009, when it said it needed to freeze payments on debt owed by its largest group, Dubai World. But the conglomerate succeeded by March in reaching an agreement with lenders to restructure $14.7 billion of debt.
Economists have been bullish about growth prospects for Dubai’s economy after it had contracted about 2.4 percent in 2009 following several years of rapid economic growth.
The economy grew by a mere 0.5 percent last year, according to the IMF, which expects it to expand by nearly three percent this year.