The Dubai government on Monday hinted that it may not bail out debt-ridden Dubai World unconditionally and asked its creditors to share responsibility forthe crisis.
"They (the creditors) think Dubai World is part of the government, which is not correct. The government is the owner of the company, but since its foundation it was clearly established that the company is not guaranteed by the Dubai government," Dubai's Department of Finance Director General Abdulrahman al-Saleh told Dubai Television.
Last Wednesday, Dubai said it would seek a six months freeze until up to May, on debt repayment of its main investment arm Dubai World, which has $59-billion debts.
Al-Saleh's statement comes on a day when the Dubai stock market plummeted over nine per cent and rest of the markets on the Emirate shed over seven per cent on the first day of trade after the crisis was broke out last Wednesday.
The statement also sends out mixed signals to the earlier reports that Abu Dhabi might bail out Dubai on a case-to-case basis.
Investors are also awaiting details on the government's request for a six-month delay on Dubai World's repayment schedules.
Al-Saleh said Dubai World borrowed for its projects and those borrowings are not with government guarantee. He however said today's market reaction was exaggerated.
"The Dubai World restructure plan is a wise decision as it is in the interest of all parties in the long-term but might bother creditors in the short-term," he declared.
Al-Saleh further said the banks may not need additional liquidity from the the UAE central bank. "I think the banks are not at a stage where they need any extra liquidity from the central bank," he said.
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