São Paulo – The United Arab Emirates are living a good economic moment, but they need to manage the debt of state-owned companies. These are some of the conclusions reached by the International Monetary Fund (IMF) after a mission to the country, completed on Wednesday (16). The Fund’s study estimates that the Gross Domestic Product (GDP) of the Emirates grew 4.9% in 2011, thanks to greater oil prices and production and to Asian growth.
Although the organisation recognises the Dubai World holding’s debt restructuring, it warns that “several other troubled government-related entities (GRE)” still recognise debt. Dubai World asked for debt restructuring in late 2008, which shook the economy of the emirate.
“GRE indebtedness, refinancing needs and reliance on foreign funding remain high, with about $30 billion GRE debt maturing this year and significant amount of debt falling due in 2014–15”, says the IMF document, which also calls for “increased transparency” and “improvements in corporate governance” among these companies.
The IMF warns that the real estate sector should continue depreciated in 2012. This is one of the reasons that has caused inflation not to exceed 1% in 2011, and forecasts are that it should not exceed 1.5% in 2012.
For this year, the IMF forecasts 2.3% growth in GDP, stimulated, mainly, by the non-oil sector, to grow by an average of 3.5%. The oil industry, in turn, which grew 9.2% in 2011, should remain stable in 2012.
The areas not connected to oil grew on average 2.7% in 2011, with special attention to the sectors of tourism, trade and logistics. The IMF stated that the banking sector remains capitalised and lucrative, despite the growing insolvency and provisions.
*Translated by Mark Ament
