Dubai's ruler Sheikh Mohammad bin Rashid sought to calm investors Tuesday after news that the largest government-owned company was unable to begin paying back the $60 billion it owes in debt.
Dubai World, among one of the nation’s chief investment arms, who is invested with everything from Barney’s to hotels around the world, has said it will begin working to restructure some of its debt.
The news from Dubai has prompted the United Arab Emirate’s market to tumble for the second straight day, down 12.9 percent so far.
Despite this Dubai’s ruler has informed Al-Arabiya television that "Our economy is strong and solid and consistent," ands claimed the media has encouraged the market to fall with all it’s talk about doomsday.
Dubai, unlike its neighbors, lacks oil wealth, making the problem of its debt more daunting and harder to fix than in an oil holding nation. The debts are hefty as well, an estimated $100 billion, born of Dubai’s ostentatious developments, including the world’s highest tower and some of its most luxurious hotels.
Much of these developments have been funded by the government via Dubai World, criticisms of which are largely prohibited despite being founded on more Westernized ideas.
The dilemma has sparked significant worry in the world market, bringing to the forefront how debts remain challenging and in some cases impossible to repay despite the economic recovery.
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