Dubai said it began repaying a $20 billion bailout loan from Abu Dhabi and the country’s central bank, as part of an effort to reduce its debt burden almost 15 years after the sheikhdom teetered on the brink of default.
Taking advantage of an economic recovery, the emirate lowered its total debt to 25% of gross domestic product with payments that include 20 billion dirhams to Abu Dhabi and the central bank. Dubai shelled out a combined 28.5 billion dirhams within a year and a half, its media office said Tuesday on social media site X, citing its debt management office.
The debt total covers the funds raised by the government to finance public expenditures and therefore excludes money owed by state-related entities because they “operate on a financially independent, commercial basis,” he said. Resurgent demand for homes, hotels and office space has helped the emirate generate more fees for goods and services, as well as receipts from taxes for property transactions, value added taxes and housing fees. Although Dubai scrapped a 30% tax on alcohol sales and made liquor licenses free since the start of 2023, that will likely be offset by a 9% federal corporate levy imposed from June.
In 2009, Dubai just skirted a default and had to turn to oil-rich Abu Dhabi, the biggest of the seven sheikhdoms in the United Arab Emirates, to support state-controlled companies through the global credit crisis. The amount has been rolled over twice since then.
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