Tuesday, 19 May 2009

Concern as Dubai Demotes Finance Director

From the Financial Times 19 May '09
Dubai on Monday night removed Nasser al-Shaikh as director-general of the department of finance, one of the most senior officials tasked with steering the emirate through the global financial crisis.

The emirate's ruler, Sheikh Mohammed bin Rashid al-Maktoum, ap­pointed as the new director-general Abdul Rahman Saleh al-Saleh, the national news agency reported.

No reason was given for Mr Shaikh's removal but his demotion to assistant director of external affairs at the ruler's court will prompt concern among the region's business elite and the bankers helping to steer Dubai out of the current downturn.

The highly regarded young official, who joined the department of finance only last year, was seen as one of the few who had grasped the scope of the economic problems facing Dubai.

The emirate's globalised economy has been hit hard: its hyped real estate sector has crashed, while business services sectors have suffered from the global econ­omic downturn.

Mr Shaikh had been leading efforts to pay off the emirate's debts of more than $75bn (€55bn, £49bn) accumulated during the boom years, forming restructuring plans for the economy and measures to address the government's cash crunch, which continues to leave many companies unpaid.

Mr Shaikh had been championing a more transparent approach to the emirate's finances as a means to help restore the city's credibility. He oversaw publication of the emirate's most detailed ever budget in January and was leading efforts to launch a sovereign rating for Dubai.

As redundancies rose and profits slumped, Dubai, once the toast of the global media, has been hit by an avalanche of bad news.

Mr Shaikh led the appointment of Rothschild as the government's adviser on setting up a financial fund to aid cash-strapped government-related bodies.

Dubai borrowed $10bn from the United Arab Emirates central bank in a bail-out loan, part of a broader $20bn bond programme launched in February. Half the funds have been disbursed to state-backed entities, such as the offshore developer Nakheel, to help them pay off contractors.

The department of finance issues the budget and oversees the finances of core government services, such as utilities and transport. Other commercial entities fall under the wing of government groups, such as Dubai World and Investment Corporation of Dubai, and the ruler's personal conglomerate, Dubai Holding.

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