Dubai pays off Dh47-billion debt as revenues get boost from IPOs, 9% corporate tax

The Dubai Government has significantly reduced its debt over the past couple of years, repaying more than Dh47 billion in debt and bonds, said a new study released on Wednesday.

The emirate repaid about Dh40 billion of debt in 2022-23 and Dh7.1 billion in bonds, according to global rating agency S&P.

“We expect Dubai's gross general government debt will decline to about 34 per cent of GDP ($50 billion) by the end of 2024 from 70 per cent of GDP in 2021,” S&P analysts said in a new note – – released on Wednesday.

“The government repaid about Dh40 billion ($11 billion) of debt in 2022-2023, including a Dh20-billion ($5.4 billion) loan from Abu Dhabi and the Central Bank of the UAE (partial repayment of $20 billion facility) and Dh7.1 billion ($1.9 billion) in bonds,” said the S&P analysts.

The emirate’s economy has bounced back strongly after the pandemic, with all the sectors growing at an exponential pace, resulting in strong revenues for the government. The introduction of 9 per cent corporate tax has boosted the emirate's revenues.

In addition, the emirate also monetised its assets over the past couple of years. Some of them were listed in 2022-23 with estimated cash proceeds for the government of about Dh33 billion ($9 billion). These included partial sales of , , district cooling service provider , , , and business district operator

“With four more companies still to be listed, the government could see another liquidity boost, which could support debt reduction or funding for the airport expansion,” said S&P.

It said the loan from the Dubai-based Emirates NBD bank declined by about half in the same period.

“As a result, we estimate that Dubai's gross government debt fell to about 38 per cent of the GDP at year-end 2023 from about 70 per cent of GDP in 2021. We assume the remaining $15 -billion facility provided by Abu Dhabi and the Central Bank of the UAE to be rolled over and broadly the same amount of the Emirates NBD loan and bilateral and syndicated facilities in our forecast,” the rating agency’s analysts said.

S&P estimated Dubai's total public sector debt remains sizeable — at about 70 per cent of GDP in 2024. This includes contingent liabilities of about 36 per cent of GDP and general government debt (34 per cent).

S&P analysts expect Dubai to get fiscal surpluses from 2024 to 2027, with no additional debt issuances for deficit financing over the next couple of years.

“We therefore project that government debt will decline as a share of GDP through 2027. Still, our forecasts do not include debt financing for the $35-billion Al Maktoum Airport expansion project or the $8.2-billion Tasreef project (a project to build a rainwater drainage network which would be completed in phases by 2033) because it is unclear how it will be distributed between the government and state-owned enterprises and the timing of issuance,” said the global rating agency.