FINANCIAL CRISIS IN DUBAI-REASONS AND EFFECTS
That is Dubai-sky piercing towers, rotating buildings, spectacular architectural designs,flow of petro-dollers,broad and clean road notworks, etc,etc.Businessmen, investers, and lusury-seekers, used to visit Dubai with all zeal.
Some weeks ago, Dubai had issued to international investers, bonds worth $1.9trillion,whiched sent the message that its economic position is unshakable!
But now that foundation has shaken!
inability to rapay loan instalments
DUBAI government has announced just recently, that it is,for the timebeing , not in a position to repay its outstanding debt of $7,40,000.At the same time, Government owned mega finance institution-DUBAI WORLD also declared that it may not be able to repay any loan for 6months.This 'Dubai World' is engaged in different business enterprises like-transport,ship building,township building,etc.A sister-concern of Dubai world,a building construction company, named NAKHEEL is also telling that it requires some more time to repay its debt instalments.
All these indicate that Dubai's financial foundation is ...... SHAKING!
Dubai, unlike other six emirates of UAE is not a country rich with oil resources.This city state is purely a business city wholly depending upon tourism and other businesses.Dubai World, in a haste to attract world enterprenuers started spending more and more on building fine roads, star hotels,etc. Foreign institutional investers also invested much here, especially during the last four years.But, for some reason, may be due to economic crisis mainly, FIIs didnot turn to Dubai for investment..AS a result, real-estate businessin Dubai suddenly collapsed.This made an impact on other businesses also.
Dubai world, has business tie-ups in different countries including India.Thes projects, may be delayed( resulting in cost increase), or dropped, or prolonged.
Unemployment problem may arise in Dubai. Enterprises may have to retrench a portion of their employees.!0 lakh Indians are working in Dubai and other UAE countries.
Foreign Institutional investers, who have business ties with Dubai World, may face loss.70 financial institutions have lent credits to Dubai world.
Banks in Duabi may face crisis.
When the world is recovering from last year's economic recession, this may push it back to same position.
Ray of hope.
Inspite of all these, experts hope that it is possible to recover.It comes out of past experience. Dubai had faced similar economic crisis in 1999.Then Abudhabhi, another emirette in UAE, had helped Dubai by lending a loan of $1,00,000.Abudhabhi is a financially stable country..It can help.
But the quantum of need this time is muchmore than it was in 1999.Just on 29th,November,Abudhabhi has announced that it would concider the financing aspect,item wise, taking each main transaction on merits.It has also clarified,it is not going to take full responsibility of all loans.
There are many wonderful constructions in Dubai.( some photoes are attached).It appears more like a fancy, a show biz. than a result of concrete planned develpoment projects.
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