Dubai ruler not worried about debt restructuring

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Old 25-Jun-2010
Dubai ruler not worried about debt restructuring

DUBAI (Reuters) - Dubai's ruler is not worried about debt restructuring and the United Arab Emirates will stay out of a planned Gulf monetary union, favouring a dollar peg, an interview transcript showed on Thursday.

The economy of the world's third largest oil exporter is expected to see the slowest growth in the Gulf region this year, with banks heavily exposed to a $23.5 billion restructuring of debt-laden state conglomerate Dubai World.

When asked whether Dubai needed additional external support to proceed with current restructuring, Sheikh Mohammed bin Rashid al-Maktoum said: "I'm not worried about the company, the company have got the wealth."

"So they have something, and they will come back very very quickly," he said in a transcript of an interview with CNN to be aired on Friday.

Sheikh Mohammed, who is also vice president and prime minister of the UAE federation, did not say which company he was referring to in the transcript provided to Reuters.

Dubai World reached a deal in May with key banks after a multi-billion dollar bailout from the Abu Dhabi emirate but the remaining creditors still await the final terms.

A unit of another conglomerate Dubai Holding, owned by Sheikh Mohammed, has said it might sell assets to deal with its debt after a $6.2 billion loss in 2009.

The loss increased challenges faced by Dubai Holding to meet its obligations, estimated at $14.8 billion out of a total $109 billion owed by the government of Dubai and its entities.

Sheikh Mohammed also indicated he was not concerned about economic challenges in the OPEC member country.

"No, Dubai and UAE, Abu Dhabi and the rest of the emirates are fine, you know, we know it is recession, we know it is (a) challenge and we dealing with it," he said.

The second-largest Arab economy is seen expanding by 2.1 percent this year after an estimated 1.4 percent contraction in 2009, lagging behind its regional peers.


Sheikh Mohammed also said rejoining a planned Gulf monetary union was not on the cards.

"The euro is in trouble and we thought of the Gulf currency and we said, well the UAE said 'not yet' and I think they are right, until we are sure," he said.

"So therefore now we will not change anything for the time being until we see something solid really and profitable," he added.

The UAE quit the plan to launch a single currency in the world's largest crude exporting region last year, after losing its bid to host a joint central bank to Saudi Arabia.

The kingdom, the top Arab economy, plans a currency union with Kuwait, Qatar and Bahrain to boost trade and political leverage and better face the power of Iran.

But the project is now nearly a decade old and officials say the currency is not likely to be launched by 2015.

When asked whether the dollar peg served the country's interests well, Sheikh Mohammed echoed comments by other UAE officials: "Yes, yes and we still believe in the dollar."

The UAE as well as other Gulf oil producers with the exception of Kuwait, decided to peg their currencies to the greenback in the past to anchor inflation.

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