The Dubai government will not guarantee Dubai World’s debts, and creditors will be affected in “the short term” by the conglomerate’s restructuring, a top Dubai government official said on Monday.
Abdulrahman al-Saleh, Director General of Dubai’s Department of Finance, also said market reaction to Dubai World’s announcement last week was exaggerated and did not match the extent of the conglomerate’s woes.
“I think banks are not at a stage where they need any extra liquidity from the central bank,” he said on Dubai TV.
“Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the goverment, which is not correct.”
Conglomerate Dubai World asked creditors last week to delay repayment of billions in debt for itself and property developer Nakheel for six months as it restructured operations. The shock announcement initially sent global markets slumping.
