Thu Nov 26, 9:16 AM ET
Rising high among the towers in Business Bay, Burj Dubai, the world tallest tower, which is still under construction, is scheduled to be open in January 2010 in Dubai, United Arab Emirates, Thursday, Nov. 26, 2009. In a brief statement Wednesday, Dubai's government said its main development engine, Dubai World, would ask creditors for a 'standstill', and to delay maturity of its $60 billion debt until at least May 2010.
DUBAI, United Arab Emirates – Just a year after the global downturn derailed Dubai's explosive growth, the city is now so swamped in debt that it's asking for a six-month reprieve on paying its bills — causing a drop on world markets Thursday and raising questions about Dubai's reputation as a magnet for international investment.
The fallout came swiftly and was felt globally after Wednesday statement that Dubai's main development engine, Dubai World, would ask creditors for a "standstill" on paying back its $60 billion debt until at least May. The company's real estate arm, Nakheel — whose projects include the palm-shaped island in the Gulf — shoulders the bulk of money due to banks, investment houses and outside development contractors.
In total, the state-backed networks nicknamed Dubai Inc. are $80 billion in the red and the emirate needed a bailout earlier this year from its oil-rich neighbor Abu Dhabi, the capital of the United Arab Emirates.
ruler, Sheik Mohammed bin Rashid Al-Maktoum, had continually dismissed concerns over the city-state's liquidity and claims it overreached during the good times.
When asked about the debt, he confidently assured reporters in a rare meeting two months ago that "we are all right" and "we are not worried," leaving details of a recovery plan — if such a plan exists — to everyone's guess.
Then, earlier this month, he told Dubai's critics to "shut up."
via news.yahoo.com
