The government is in the last phase of talking with these companies before allocating the funds, which are part of its widely publicised $20 billion stimulus package, said Nasser bin Hassan Al Shaikh, the Director-General of the Dubai Department of Finance. He spoke to reporters on the sidelines of the Wharton Global Alumni Forum here on Thursday.

“We are in negotiation with several major Dubai-based companies on extending support to them, and we will come out with the details as soon as we finalise the deals,” Al-Shaikh said.

He said the government could either lend money directly to the needy companies or guarantee loans extended to them by banks.

The government will also support small and medium-sized businesses to help them weather the crisis. Relevant government agencies are working out the details of a package for them, Al Shaikh said. Because of the general shortage of credit, he anticipates a period of consolidation among some of the emirate’s hardest-hit companies.

“But mergers would be welcome only if they make sense to the shareholders and to the economy as a whole,’’ he said. Al Shaikh left open the possibility that the Dubai government would support mergers between firms based in different emirates within the UAE. “You can’t rule out anything in 
this environment.’

He added that the government plans to introduce more reforms for Dubai’s financial markets and its real estate industry, to try to improve their transparency and accountability.

The real estate business might take longer to recover than other industries. Property values were overheated, and prices for commercial and residential units have tumbled by as much as 50 per cent in recent months. Yet Al Shaikh said this sharp drop was necessary because prices had shot up to 
unrealistic levels.

Other sectors of Dubai’s economy such as tourism might rebound sooner, thanks to various government initiatives, he said. 

  ramavarman@khaleejtimes.ae