{
  "title": "IMF Survey: IMF Says Dubai Debt Fallout Contained, Events Still Unfolding",
  "publication": "IMF News, December 4, 2009",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/socar120409a",
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  "summary": "Following Dubai’s jolting announcement that it would seek a standstill on the debt of Dubai World, the emirate’s flagship holding company, the government has taken several steps to contain the fallout.",
  "publishDate": "2009-12-04",
  "sections": [
    {
      "heading": "Immediate response and containment",
      "content": "- Event timeline:\n  - Dubai announced it would seek a standstill on the debt of Dubai World on November 25.\n  - The Central Bank announced a supplementary liquidity facility and reaffirmed it stands behind banks in the United Arab Emirates on November 29.\n  - Dubai World announced it would restructure debt amounting to $26 billion in a November 30 statement.\n  - Dubai World indicated on December 1 that it would strive for equitable treatment of creditors.\n- Key containment actions:\n  - Central Bank’s supplementary liquidity facility and public support for UAE banks helped calm markets, especially because these banks hold some Dubai World and Dubai Government debt.\n  - Dubai World’s engagement with creditors and clarification of the size and scope of debt to be restructured reduced market uncertainty.\n- IMF emphasis:\n  - “Engagement and communications with creditors and investors will be critical to ensure an orderly and timely solution.”\n  - “The debt restructuring process now needs to be taken forward.”"
    },
    {
      "heading": "Debt restructuring details",
      "content": "- Total restructured debt announced: $26 billion.\n- Real estate component: $6 billion related to Nakheel, Dubai World’s real estate subsidiary.\n- Exclusions from restructuring process:\n  - Non-real estate corporations such as Infinity World Holding, Istithmar World, and Ports & Free Zone World (which includes DP World, Economic Zones World, P&O Ferries, and Jebel Ali Free Zone) were specified as not included.\n- Market signaling:\n  - Commitment to equitable treatment of creditors expected to have a positive impact on markets."
    },
    {
      "heading": "Regional economic implications",
      "content": "- Short-term growth outlook:\n  - Recovery of Dubai’s economy is very likely to slow down, resulting in another year of slight contraction in the non-oil GDP.\n  - The UAE as a whole is expected to still register positive growth in 2010, albeit below the 3 percent pre-crisis forecast.\n- Sectoral outlook:\n  - Global trade and services: poised to recover with global growth, particularly in Asia.\n  - Property sector: expected to take longer to bounce back due to:\n    - dented confidence and lowered reputation affecting equity valuations, risk premia, and access to international markets;\n    - more restrictive credit conditions as a result of increased risk aversion;\n    - financial losses from restructured obligations impacting corporate and household balance sheets."
    },
    {
      "heading": "Global impact and channels of spillover",
      "content": "- Direct financial effects:\n  - Direct financial effects on international banks appear to be contained.\n- Key variables determining broader implications:\n  - perceptions of risk in the Gulf Cooperation Council countries and quasi-sovereign debt markets;\n  - potential sales of some Dubai World assets and consequent reevaluations of certain asset classes globally, especially commercial property;\n  - handling of Dubai World’s debt restructuring and the effect on investment flows into and from the UAE.\n- Nonfinancial channels that could transmit effects to the region:\n  - foreign direct investment;\n  - trade;\n  - remittances;\n  - sells-offs of Dubai World assets.\n- Uncertainty and mitigation:\n  - Considerable uncertainty around the scope and magnitude of these effects as the event is still unfolding.\n  - Impact would be muted because of recovery and growth in the region as a whole."
    },
    {
      "heading": "Implications for investors and quasi-sovereign entities",
      "content": "- Risk assessment shifts:\n  - The event is likely to have an impact on future risk assessments of quasi-sovereign entities and on the degree of transparency that investors demand.\n  - “Investors will start to look more carefully at implicit guarantees. There will be also a broader reassessment of quasi-sovereign commercial risks.”\n- Policy and transparency recommendations:\n  - Transparency and the timely provision of informative data on quasi-sovereign commercial entities would be crucial for such corporations’ access to international investors.\n\nIMF Survey: IMF Says Dubai Debt Fallout Contained, Events Still Unfolding (December 4, 2009).\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Country Focus\n- In The News\n- Transcript of briefing\n- UAE and the IMF\n- IMF press release\n- Middle East regional outlook\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar120409a"
    }
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    "Published: December 4, 2009",
    "Event timeline:",
    "Key containment actions:",
    "IMF emphasis:",
    "Total restructured debt announced: $26 billion.",
    "Real estate component: $6 billion related to Nakheel, Dubai World’s real estate subsidiary.",
    "Exclusions from restructuring process:",
    "Market signaling:",
    "Short-term growth outlook:",
    "Sectoral outlook:",
    "Direct financial effects:",
    "Key variables determining broader implications:",
    "Nonfinancial channels that could transmit effects to the region:",
    "Uncertainty and mitigation:",
    "Risk assessment shifts:",
    "Policy and transparency recommendations:",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Country Focus](https://www.imf.org/en/news/country-focus)",
    "[In The News](https://www.imf.org/en/news/search)",
    "[Transcript of briefing](http://www.imf.org/external/np/tr/2009/tr120209.htm)",
    "[UAE and the IMF](http://www.imf.org/external/country/ARE/index.htm)",
    "[IMF press release](http://www.imf.org/external/np/sec/pr/2009/pr09433.htm)",
    "[Middle East regional outlook](https://www.imf.org/external/pubs/ft/reo/2009/MCD/eng/mreo1009.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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