Dubai’s debt burdens will worsen amid the Corona shock … Standard...

The credit ratings agency Standard & Poor’s said that the high debt burdens in the emirate of Dubai will worsen amid a macroeconomic shock related to the Corona epidemic.In a report, Saturday, the agency maintained its previous forecast that Dubai’s economy would contract sharply by about 11 percent in 2020.

In part, this is due to the UAE’s economy’s focus on travel and tourism, which are two of the industries worst hit by COVID-19.The tourism sector, which is very important to the emirate, was dealt a major blow due to the tight restrictions taken by Dubai on the entry of foreigners, before it resumed receiving tourists from July 7, amid low demand due to health concerns.

According to the report, the agency expects Dubai’s total public government debt to reach 77 percent as a percentage of GDP in 2020, equivalent to 290 billion dirhams ($ 79 billion), compared to 61 percent in 2019.

The report continued: “The increase in the debt burden ratio is partly due to the sharp decline in gross domestic product due to the repercussions of Corona.”The agency said that the broader public sector assessment, including the debt of government-linked entities, points to a debt burden closer to 148 percent of GDP.

She said, “In the event of financial hardship, we expect Dubai to receive more financial support from the emirate of Abu Dhabi … Dubai’s economy will recover to 2019 levels by 2023.”

She pointed out that the great exposure to tourism and aviation puts it in a position more affected by the epidemic, as well as the broad impact of the drop in oil prices on the economies of the Gulf Cooperation Council countries, of which Dubai is one of them.

The Dubai government expects to record a historically large central government deficit of 12 billion dirhams ($ 3.27 billion), or 3.2 percent of GDP, this year, amid a 28 percent drop in revenues.