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Dubai spending plans unaffected by oil price slump: official

Dubai’s Department of Finance does not have any immediate plans to raise debt and ‘should really balance the budget’

Published: Updated:

The sustained slump in oil prices will not alter Dubai’s spending or investment plans, a senior official said on Wednesday, although the emirate’s banks may struggle to expand conventional revenue streams next year.

Oil makes up 2 percent or less of Dubai’s economy, said Mohammad al-Shaibani, chief executive of state-owned Investment Corporation of Dubai (ICD), although energy is still a key determinant of business confidence in the wider Gulf.

“There won’t be a lot of shift in terms of strategy,” Shaibani told a media round table.

Dubai’s Department of Finance does not have any immediate plans to raise debt and “should really balance the budget,” he said.

“The growth in the country and in the income is (through) services and is more or less enough to support the planned budget.”

Banks in the United Arab Emirates are working together to try to stem the number of small business owners fleeing the country with unpaid debt, a trend that has already reached around $1.4 bln this year, a senior banking official warned this week.

But Shaibani was bullish on the immediate prospects for Dubai banks. ICD owns stakes in two of Dubai’s biggest lenders Emirates NBD and Dubai Islamic Bank.

“I don’t think we’ll have a lot of NPLs on the balance sheet because I think the banks have learned a good lesson and they are very careful,” said Shaibani.

“The banks are going to do really well this year. Overall, the results will be very positive. That’s what we expect. Next year will be slightly challenging.”