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Dubai Govt Pays All Dues on Infrastructure Projects

DUBAI - The Dubai government has paid all outstanding obligations for public sector infrastructure projects, including to contractors, following a short delay, the head of the Gulf emirate’s finance department said on Monday.

The cost of insuring Dubai’s debt with credit default swaps has been widening for months on concerns that government-linked firms could default on loans as the Gulf Arab trade and tourism hub goes through a real estate downturn.

Outstanding payments related to public infrastructure projects, including a metro network and airport expansion, are now complete, Nasser Al Shaikh, director-general of the Dubai Department of Finance, said.

“As of today, we are up to date with all payments on all fronts for all public infrastructure projects,” Shaikh told Reuters. “There were slight delays because we were focused on finalising the 2009 budget and closing 2008 accounts.”

Dubai’s property sector is slowing after the global financial crisis brought to a close a six-year building boom that began when the emirate first allowed foreigners to own properties on a freehold basis.

While Dubai catapulted itself into the international spotlight with projects such as the world’s tallest tower and islands in the shape of palms and the world map, it also borrowed heavily to finance its massive infrastructure and real estate projects.

Several Dubai-based contractors told Reuters earlier this month that they are owed millions of dirhams by state-linked developers and some said they could face bankruptcy as credit dries up and major projects are cancelled.

Residential real estate prices have declined by about a quarter, on average, in Dubai since peaking late last year, Morgan Stanley said this month. Shuaa Capital said last month prices could fall 60 percent in 2009 from a peak last year.

Shaikh said Dubai’s executive council and department of finance were in the process of revising the economic component of Dubai’s 2015 strategic plan, which had envisioned annual economic growth of 11 percent per year.