The booming city of Dubai showed signs its economy was starting to crack Monday as it began cutting state spending, capping its building spree and merging its lenders in the face of the global financial crisis.World business leaders met Monday for a four-day conference at the Dubai International Financial Center (DIFC) where financers were set to discuss Middle East coping strategies as well as how to help sinking western economies.
Dubai officials remained optimistic at the annual meet but seemed to cave under world pressure as they revealed for the first time the level of debt the emirate has accumulated during one of the world's biggest building sprees.
"Dubai is not immune to the problems caused by the global financial crisis, but the region is better placed than most to deal with the issues arising," Mohammed al-Abbar, a member of the Dubai Executive Council and chairman of government-owned Emaar Properties said. He added that total company assets were more than $350 billion while total debts were just $80 billion.
Dubai's sovereign debt stands at $10 billion while the debts of state-affiliated firms amount to $70 billion, he said, broadly in line with external estimates.
In response to ongoing speculation that Dubai may not be able to meet its debt obligations Abbar said: "Let us put an end to this speculation ... and let me state categorically, that the government can, and will, meet all its obligations going forward; so please have no doubt about this fact."
He noted that Dubai had been growing at a rate of 13 percent to 14 percent a year and that a slowdown would be welcome. "If this comes down to six percent or seven percent or eight percent then fine. We've been running a long time and could probably do with a breather. We will use this time to learn lessons and become a stronger city," he said, seeking to put a positive spin on the crisis.
Dubai is famous for manmade islands in the shape of palm trees and the world map, an indoor ski slope in the desert and a reputation as a shopping haven.
The emirate recently staged an extravagant $20 million party complete with a massive fireworks display and a star-studded guest list to launch the opening of luxury resort Atlantis, the move was criticized as over-the-top considering the current global turmoil.