A matter of life and public debt: expect some belt tightening with UAE’s debts maturing

A matter of life and public debt: expect some belt tightening with UAE’s debts maturing

With a public debt law on its way and global debt averaging 59.3 percent, the UAE’s public debt is hair-raising but manageable with a little rolling up of some sleeves.

June 28, 2011 3:41 by Precious de Leon

This Tuesday, Emirates 24/7 reported that the UAE gross public debt is estimated at around $236.1 billion, according to 2010 estimates by International Monetary Fund (IMF). The article went on to report that the Federal government owes $19.1 billion, Abu Dhabi is at $104 billion and Dubai is at $112 billion.

There will be some definite belt tightening with about $17.1 billion of that debt maturing in 2011, a majority of which are from government-related entities. Next year, nearly $10.6 billion will mature. So if you expect to be here a little bit longer, expect to be squeezed a little bit more—although I’m sure being between a rock and a hard place is not new territory for must of us who’ve survived the crash of2008.

As public debts go, the UAE’s ain’t half bad. According to this site, the UAE is in 61st place in terms of the world’s largest public debt. Top honours go to Japan, which the IMF estimates has a public debt that is 228.5 percent of its GDP, according to 2010 estimates.

The GCC country that ranks highest on this list is Bahrain at no. 36 with 59.20 percent of its GDP. At the other end of the spectrum is Oman, which only has public debt of 4.4 percent of its GDP as of last year’s estimates, followed by Qatar at 10.3 percent.

(Note that Emirates 24/7 puts total debt at “nearly 54.2 percent of GDP”, while the CIA site puts it at 44.6 percent of the GDP but the country rankings are generally the same.)

Dialogue about the country’s debt follows last month’s announcement about the imminent approval of a law allowing the UAE to issue its first ever federal sovereign bonds and create a local debt market, which would regulate the amount of debt the UAE may accumulate. At the time, Kipp covered it, a presidential nod was all that’s left to get the bill into motion.

According to that article, the legislation would limit UAE government debt to 25 percent of gross domestic product, or 200 billion dirhams ($55 billion).