Dubai Repays $5.5 Billion of Crisis-Era Loan in Debt Cutback

Dubai said it began repaying a $20 billion bailout loan from Abu Dhabi and the country’s central bank, as part of an effort to reduce its debt burden almost 15 years after the sheikhdom teetered on the brink of default.

(Bloomberg) — Dubai said it began repaying a $20 billion bailout loan from Abu Dhabi and the country’s central bank, as part of an effort to reduce its debt burden almost 15 years after the sheikhdom teetered on the brink of default.

Taking advantage of an economic recovery, the emirate lowered its total debt to 25% of gross domestic product with payments that include 20 billion dirhams ($5.5 billion) to Abu Dhabi and the central bank. Dubai shelled out a combined 28.5 billion dirhams within a year and a half, its media office said Tuesday on social media site X, citing its debt management office. 

Dubai initially set out to bring government liabilities to one-quarter of GDP by the end of 2024 but met the target a year early, Rashed Ali Bin Obood Al Falasi, head of the Public Debt Management Office, said in emailed comments via the media office. 

“Dubai witnessed a strong revenue performance and robust economic growth in the last few years, which helped the government to successfully achieve this goal,” he said.

The debt total covers the funds raised by the government to finance public expenditures and therefore excludes money owed by state-related entities because they “operate on a financially independent, commercial basis,” he said.

S&P Global Ratings, whose assessment includes 106.7 billion dirhams in government loans from Emirates NBD, now puts Dubai’s debt at 45% of GDP this year, down from its earlier estimate of about 50% and the lowest since 2011.

“The recent announcement goes over and above what we had been expecting,” S&P analyst Trevor Cullinan said by email. “We didn’t expect the government to start repaying Abu Dhabi and UAE Central Bank debt given its concessional nature.”

Boom Town

Dubai’s economy is thriving, fueled by an influx of newcomers — from crypto millionaires and bankers relocating from Asia to wealthy Russians seeking to shield assets. Sectors from hospitality to retail are enjoying a remarkable comeback, while new arrivals have pushed property prices to record levels. 

Resurgent demand for homes, hotels and office space has helped the emirate generate more fees for goods and services, as well as receipts from taxes for property transactions, value added taxes and housing fees. Although Dubai scrapped a 30% tax on alcohol sales and made liquor licenses free since the start of 2023, that will likely be offset by a 9% federal corporate levy imposed from June.

Another revenue stream has come from Dubai’s drive to raise trading volumes in the city’s stock market by selling stakes in 10 state-owned companies such as DEWA and Salik PJSC. The emirate listed four assets last year and raised about $8 billion, data compiled by Bloomberg show.

Though the full picture isn’t yet clear, evidence suggests a new focus in Dubai on reducing a debt load that S&P said had reached a “cyclical high” of 78% of GDP in 2020. The burden has gone into decline with the creation of a debt management office last year, as the economy booms after emerging from the global pandemic as an investment safe haven and a magnet for tourists and the wealthy.

In 2009, Dubai just skirted a default and had to turn to oil-rich Abu Dhabi, the biggest of the seven sheikhdoms in the United Arab Emirates, to support state-controlled companies through the global credit crisis. The amount has been rolled over twice since then.

S&P estimated last May that the $20 billion in loans from Abu Dhabi and the central bank made up 30% of Dubai’s gross general government debt and said it expected them to be rolled over again.

The repayments were part of a 2022-2024 debt sustainability plan that helped reduce liabilities to “a safe and low level,” according to the Public Debt Management Office. 

Read More: Dubai Debt Burden Seen Dropping Sharply by S&P as Economy Booms

Dubai also repaid a 3.3 billion-dirham sukuk and 5.2 billion dirhams in bank loans, the media office said. 

The emirate rarely issues public debt and previously looked to raise capital by means of private placements and bilateral loans. Dubai isn’t rated by any of the three major credit assessors.

“Apart from government revenues raised due to the robust performance of the Dubai economy, funds raised by the part sale of government companies such as DEWA, Salik and Empower are also likely to be supporting the government’s ability to reduce its debt stock,” S&P’s Cullinan said.

(Updates with Debt Management Office comments starting in third paragraph.)

More stories like this are available on

©2023 Bloomberg L.P.