Dubai to reduce public debt by Dh29 billion

Dubai government on Tuesday announced a reduction of approximately Dh29 billion in the public debt by the end of this year, including partial settlement of Dh20 billion loan extended by the Abu Dhabi government and the Central Bank of the UAE.

The public debt-to-GDP ratio now stands at a safe and conservative level of 25 per cent, while internationally recognised thresholds typically range between 40 and 60 per cent, underscoring Dubai's prudent fiscal management.

The achievement has been reached within 16 months of the establishment of the Public Debt Management Office (PDMO), under the Dubai Department of Finance (DOF), in May last year.

“Despite ongoing global economic challenges, DOF not only achieved financial efficiency for the government of Dubai but also seized opportunities from adversity,” said Abdulrahman Al Saleh, director general of DOF.

He added the department had been able to "achieve rational spending on projects, improve and diversify revenue and optimise the use of financing instruments".

"This has facilitated the fulfilment of government financial obligations according to the scheduled dates, in addition to accelerating the fulfilment of some other obligations,” Mr Al Saleh said.

The reduction in debt will be achieved across all classes in the government debt portfolio, the media office said.

As part of Dubai Economic Agenda 'D33' launched earlier, the emirate aims to position itself among the top three global economic cities and double the size of the economy to Dh32 trillion over the next ten years.

The public sector revenues have increased on the back, increased tax revenues and faster growth of the local economy.

The Public Debt Management Office was established under the directives of Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council of Dubai, and under the supervision of Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, and Deputy Prime Minister and Minister of Finance of the UAE.

Debt burden of Dubai's government as a share of the emirate’s GDP will fall this year as its economy will continue to grow robustly despite global macroeconomic headwinds, S&P Global Ratings said in a report in May.

Dubai's gross general government debt is expected to drop to 51 per cent of its GDP this year from a cyclical high of 78 per cent in 2020, the rating agency said in its report on the emirate's economy.

“PDMO launched its Public Debt Sustainability Strategy programme for 2022-2024, marked by the successful implementation of various strategic initiatives aimed at enhancing the efficiency of the public debt portfolio," said Rashed Al Falasi, PDMO's chief executive.

"The objectives include reducing borrowing costs, mitigating refinancing risk and ensuring the government’s financial stability in the medium term.

"The programme also aims to shape robust public financial policies and foster confidence among investors and financial institutions through maintaining a high level of transparency and credibility."