Dubai, UAE – October 16, 2024 – The Dubai Government has successfully reduced its debt burden, repaying over Dh47 billion in debt and bonds in recent years, according to a new report from S&P Global Ratings.
Key Highlights
- Debt Repayment: The emirate repaid approximately Dh40 billion during the fiscal year 2022-23, which includes a Dh20 billion loan from Abu Dhabi and the UAE Central Bank, alongside Dh7.1 billion in bonds.
- Improved Debt-to-GDP Ratio: S&P projects that Dubai’s gross general government debt will decline to around 34% of GDP (approximately $50 billion) by the end of 2024, significantly down from 70% of GDP in 2021.
Economic Resilience
The report underscores a strong post-pandemic economic recovery, with growth across multiple sectors leading to increased government revenues. The recent introduction of a 9% corporate tax has further bolstered fiscal health.
The government also monetized assets over the past two years, raising about Dh33 billion ($9 billion) through listings, including stakes in major entities like Dewa, Salik, and Empower.
Future Growth Potential
S&P analysts anticipate additional liquidity boosts as the government plans to list four more companies, which could facilitate ongoing debt reduction and funding for critical infrastructure projects, including the $35 billion Al Maktoum Airport expansion.
While the overall public sector debt remains substantial at around 70% of GDP in 2024, analysts project fiscal surpluses from 2024 to 2027, with a continued decline in government debt as a percentage of GDP.
Strategic Outlook
S&P’s forecast does not include potential debt financing for significant projects such as the $8.2 billion Tasreef rainwater drainage network, highlighting the need for clarity on funding allocations between the government and state-owned enterprises.
This effective debt management strategy, combined with a resilient economy, positions Dubai for a stable and promising financial future, enhancing its attractiveness to investors and businesses alike.
