15 Dec 2009

$US10 billion bailout

6:03 am on 15 December 2009

The government of Dubai has been given $US10 billion by its fellow emirate Abu Dhabi to help pay its debts.

The BBC reports it will use nearly half the money to bail out the government-owned investment company Dubai World.

The company's property development operation, Nakheel, needed the money to pay investors in an Islamic bond which was due to mature on Monday.

Dubai has been badly hit by the global downturn.

News of the payment boosted share markets in the United Arab Emirates. Dubai's main share index closed 10% higher, while Abu Dhabi's rose more than 7%.

Abu Dhabi has helped its neighbour out before. Both are part of the seven-member UAE. Their ruling families are from the same tribe.

Unlike Dubai, whose economy is largely a service sector one, Abu Dhabi has substantial oil reserves.

On 25 November, the Dubai government said it would ask its creditors for a freeze on Dubai World's $US26 billion debt repayments.