A recent study released on Wednesday reveals that the Dubai Government has made substantial progress in reducing its debt over the past couple of years, repaying more than Dh47 billion in debt and bonds.
According to global rating agency S&P, the emirate repaid approximately Dh40 billion of debt in 2022-23 and Dh7.1 billion in bonds. S&P analysts predict that Dubai's gross general government debt will decrease to about 34 per cent of GDP ($50 billion) by the end of 2024, down from 70 per cent of GDP in 2021.
The government's strong economic recovery post-pandemic, driven by exponential growth across all sectors, has significantly boosted revenues. The introduction of a 9 per cent corporate tax has further enhanced the emirate's revenue streams. Additionally, Dubai has monetized some of its assets over the past few years, with partial sales of utility company Dewa, toll operator Salik, district cooling service provider Empower, Parkin, Dubai Taxi Co., and business district operator Tecom, generating an estimated Dh33 billion ($9 billion) in cash proceeds for the government.
S&P notes that with four more companies still to be listed, the government could experience another liquidity boost, potentially supporting further debt reduction or funding for airport expansion projects. The loan from the Dubai-based Emirates NBD bank has also decreased by about half during the same period.
Despite these reductions, S&P estimates that Dubai's total public sector debt will remain substantial at about 70 per cent of GDP in 2024, including contingent liabilities of about 36 per cent of GDP and general government debt (34 per cent). The agency forecasts fiscal surpluses for Dubai from 2024 to 2027, with no additional debt issuances planned for deficit financing in the next couple of years.
However, S&P's forecasts do not account for potential debt financing for the $35-billion Al Maktoum Airport expansion project or the $8.2-billion Tasreef project, as it remains unclear how these projects will be distributed between the government and state-owned enterprises and the timing of their issuance.
