Dubai received a $10 billion advance from the oil rich, neighboring nation of Abu Dhabi. The money went toward saving one of Dubai’s most valued companies, Dubai World, from collapse and served to relax uncertainties regarding the city’s financial instability. In the hours that followed, Dubai's main stock market rose in excess of 10 percent.
Dubai World, the expansive conglomerate with stake in everything from Barney’s New York to luxury cruise liner, Queen Elizabeth 2, announced that it would unable to begin paying off the mounting debt from its Nakheel property sector.
That has changed with the transfer of funds, $4.1 billion of which will go to the repayment of such loans. The remainder of the sum will go to reorganizing and repairing problems in Dubai World itself.
The reluctance of Dubai’s government to take responsibility for the $60 billion in debt has caused encouraged global skepticism regarding the nation’s financial credibility. Abu Dhabi’s support was an attempt to squelch these doubts and redeem faith in the greater United Arab Emirates.
Damage control continued with Dubai and Emirates officials reassuring the public that "transparency, good governance and market principles," remain central to their frameworks. In the hopes of renewing investor interest and trust, Dubai promised more openness and protection for creditors in forthcoming transactions with the corporation.
"We are here today to reassure investors, financial and trade creditors, employees and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices," said chairman of the Dubai supreme fiscal committee, Sheik Ahmed bin Saeed Al Maktoum, in a statement.
Many may continue to be skeptical regarding the chairman’s assurance, with the indirect and direct bailout money provided by Abu Dhabi to Dubai in the past year now reaching $25 billion.
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