Dubai World, the state backed business conglomerate ,which is in neck deep debts has struck a deal with lenders to restructure its $23.5bn (£16bn) debt, in a bid to save the company’s reputation and to bring back the economy of the emirates on track. The proposed agreement with 60 per cent of Dubai world’s lenders will revitalize the economy, which was in a limbo.
Dubai World rocked global financial markets when it asked lenders for a six-month moratorium on $4bn of debt repayments due a month later. The confidence reposed by many investors and the reputation of Dubai World in the global financial markets dropped sharply with this . By then the tiny state ran up debts of around $80bn, according to Bank of International Settlements. The money was utilized to fund numerous projects including the Burj Khalifa, the 828m tall record-breaking skyscraper to the luxurious palm islands that housed many of the expats who were hired on tax-free salaries for completing Project Dubai. Many felt that this crisis would not have snowballed into a global issue had Dubai world pushed on with its fund sourcing well in time instead of buying time and hoping for a miracle.
Now the reputation of Dubai is at stake and they need to send out a clear cut message that they are taking remedial measures to rectify the financial imbroglio that they have landed into. Regaining the confidence of the international business community and winning back their trust would be the top most priority for Dubai.
Now the reputation of Dubai is at stake and they need to understand that attracting foreign contractors with low debt markets and liberal trade rules is not enough to float a paradise. Reputation Management For.com gets this feeling that it is good for the time being that Dubai World sit back chalks out a long term policy and let the momentum restart. Now that Dubai World is not in a position to deliver dreams, leave alone this promise tag to investors about dreams and salvage their credibility, which has already taken a beating.