The UAE will have total debt amounting to $184 billion by the end of this year, according to estimates by Bank of America-Merrill Lynch, which said the region faces a heavy redemption schedule until 2013.

Dubai’s shock announcement this week that it is seeking to suspend payments on
debt of its state-owned conglomerate Dubai World and property subsidiary Nakheel
has roiled global markets, raising fears that the emirate which funded a spectacular
building boom on a mountain of debt could default.

They said in a report that the restructuring undertaken by Dubai would be a serious blow
to the Gulf region’s economic recovery prospects, adding that the scale of the region’s debt was now the issue.

“The lack of official debt data may add up to uncertainty and cause higher risk premiums,” they were quoted as saying in our sister publication, the Gulf daily News.

Of the $184 billion UAE debt, Dubai holds $88 billion while Abu Dhabi accounts for $90 billion.

BofA-Merrill Lynch said the debt servicing cost will be higher than these estimates as their numbers only include the principal payments.

The bank said Dubai faces almost $50 billion of debt amortization in the next three years:
$12 billion next year, $19b in 2011 and $18 billion in 2012.

“We estimate the total debt for Dubai World as $26.5 billion, 80 per cent of which needs to be paid back in the next three years,” added BofA-Merrill. – TradeArabia News Service