Abu Dhabi, capital of the United Arab Emirates and one of the world’s top oil exporters, will “pick and choose” how to assist its debt-laden neighbour Dubai, a senior Abu Dhabi official said.
“We will look at Dubai’s commitments and approach them on a case-by-case basis. It does not mean that Abu Dhabi will underwrite all of their debts,” the official in the government of the emirate of Abu Dhabi said.
A policy of selectively assisting cash-strapped companies affiliated with the government of Dubai, instead of providing blanket assistance, challenges assumptions made by many investors who assumed that wealthy Abu Dhabi provided a complete safety net for its racier neighbour.
Dubai’s crisis exploded on Wednesday when the emirate, known for flashy lifestyles and the world’s tallest building, said it would delay payment on debt issued by one of its flagship firms, angering investors and sending global markets sharply lower.
“Until things become clearer, it is very difficult to make any further investment decision on the bonds. Many things have to be clarified by Dubai,” the official said.
The UAE central bank said it was closely watching events stemming from the Dubai debt crisis to ensure no harm results for the national economy, a spokesman for the central bank said on Saturday.