• Business

Dubai Successfully Reduces Public Debt by Dh29 Billion, Ensuring Fiscal Stability

by Swati Gupta

September 27, 2023 26

Dubai, UAE – In a significant financial achievement, the Dubai government has announced a reduction of approximately Dh29 billion in its public debt by the end of this year. This accomplishment includes a partial settlement of Dh20 billion of a loan extended by the Abu Dhabi government and the Central Bank of the UAE. The move has led to a public debt-to-GDP ratio of 25 per cent, well below the internationally recognized thresholds ranging between 40 and 60 per cent, showcasing Dubai’s prudent fiscal management.

The Public Debt Management Office, operating under the Government of Dubai’s Department of Finance, revealed that this milestone has been reached within just a year and a half since its establishment in 2022. It underscores the government’s unwavering commitment to responsible financial management and long-term fiscal sustainability.

Dubai’s economy, the largest financial center in the region, demonstrated robust growth, expanding by 2.8 per cent year-on-year in the first quarter of 2023 to Dh111.3 billion. This growth has been driven by the impressive performance of key sectors, including transportation and storage, as well as finance and insurance.

Aligned with the Dubai Economic Agenda ‘D33,’ the emirate has set ambitious goals to position itself among the top three global economic cities and double its economy’s size to Dh32 trillion over the next decade. This vision has been fueled by increased tax revenues and accelerated growth in the local economy.

The establishment of the Public Debt Management Office was carried out under the directives of Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council of Dubai, with 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.

The debt reduction strategy implemented by the Public Debt Management Office spans across all debt classes in its portfolio. This includes a full redemption of Sukuk certificates worth Dh3.3 billion, the repayment of bilateral and syndicated facilities totaling Dh5.2 billion, and a substantial partial settlement of Dh20 billion from the financing extended by the Abu Dhabi government and the Central Bank of the UAE.

Abdulrahman Saleh Al Saleh, Director-General of the Department of Finance, commented on the achievement, saying, “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. The support received from the leadership has enabled us to achieve rational spending on projects, improve and diversify revenues, and optimize the use of financing instruments. This has facilitated the fulfillment of government financial obligations according to the scheduled dates and accelerated the fulfillment of some other obligations.”

Rashed Ali bin Obood Al Falasi, Chief Executive Officer of the Public Debt Management Office, highlighted the launch of the Public Debt Sustainability Strategy (PDSS) program for 2022-2024. This program aims to enhance the efficiency of the public debt portfolio by reducing borrowing costs, mitigating refinancing risk, and ensuring the government’s financial stability in the medium term. It also emphasizes the importance of transparency and credibility in maintaining investor and financial institution confidence.

Al Falasi further noted that the reduction in public debt would significantly bolster government financial liquidity, enabling it to meet any funding requirements, particularly for strategic projects and initiatives such as Dubai Urban Plan 2040 and the Dubai Economic Agenda (D33).

Dubai’s remarkable success in reducing its public debt demonstrates its commitment to financial responsibility and sustainability, positioning the emirate for continued economic growth and development in the years to come.