Dubai Achieves Significant Debt Reduction with Over Dh47 Billion Paid Off

Dubai has made significant progress in reducing its debt, paying off more than Dh47 billion in debt and bonds over the past two years, according to a report released on Wednesday. Global rating agency S&P confirmed that the emirate repaid Dh40 billion in debt during 2022-23, along with Dh7.1 billion in bonds.

S&P analysts expect Dubai's gross government debt to drop to around 34% of GDP ($50 billion) by the end of 2024, down from 70% in 2021. The substantial debt repayment includes a Dh20-billion loan from Abu Dhabi and the Central Bank of the UAE and a Dh7.1-billion bond settlement.

 

Dubai's economy has shown a robust recovery post-pandemic, with all sectors growing rapidly, resulting in increased government revenues. The introduction of a 9% corporate tax has further boosted the emirate's income.

 

Additionally, the government monetized its assets through multiple initial public offerings (IPOs) over the last two years. These listings, including partial sales of DEWA, Salik, Empower, Dubai Taxi Co., and Tecom, generated an estimated Dh33 billion ($9 billion) for the government. S&P notes that with four more companies slated for listing, Dubai could see an additional liquidity boost, potentially aiding further debt reduction or funding expansion projects such as the airport.

 

The report also highlighted that loans from Emirates NBD bank were reduced by nearly half during this period. As a result, Dubai's gross government debt is estimated to have fallen to around 38% of GDP by the end of 2023, compared to 70% in 2021.

 

Despite these repayments, Dubai's public sector debt remains considerable, projected to be around 70% of GDP by 2024. This includes contingent liabilities of about 36% of GDP and general government debt at 34%.

 

Looking ahead, S&P analysts expect Dubai to achieve fiscal surpluses from 2024 to 2027, with no additional debt issuances planned for deficit financing. However, the forecasts do not yet account for potential debt related to major projects like the $35-billion Al Maktoum Airport expansion or the $8.2-billion Tasreef rainwater drainage project, as details on funding distribution and timing remain unclear.

 

This economic resurgence and debt reduction reflect Dubai’s strong financial standing and growing revenue streams from corporate tax and asset sales.

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