The government of the financially troubled Dubai announced on Thursday a projected 2010 budget deficit its of AED6 billion ($1.63 billion /1.13 billion euros), or 16.9 percent of expenditure. Income is projected at 29.4 billion dirhams (8.01 billion dollars), a 12 percent drop from 9.1 billion, the head of the department of finance, Abdulrahman Al-Saleh, said in a statement carried by WAM state news agency. Spending is projected at 35.4 billion dirhams ($9.63 billion), down 6.5 percent from last year's 10.3 billion. Saleh said 30 percent of spending, or 1.9 billion dollars, has been earmarked for investment expenditure “to upgrade and complete infrastructure projects.” In past years, Dubai has channeled large sums of money into building a modern infrastructure, including a metro link and numerous wide highways. Saleh said the deficit represents just two percent of the gross domestic product of the emirate, whose economy had been hit badly by the global financial crisis, which crippled its once-booming and vital real estate sector. Dubai also narrowly escaped a debt catastrophe last month. Its major state-owned Dubai World nearly defaulted on some of its debt, but was rescued by a last-minute lifeline of 10 billion dollars from neighboring Abu Dhabi. Dubai's debt, mostly owed by its state firms, is around $100 billion. Despite the crisis, Dubai inaugurated this week the world's tallest tower which rose 828 meters (2,717 feet). Known since construction began as Burj Dubai, the tower was renamed as Burj Khalifa, after the president of the United Arab Emirates, Sheikh Khalifa bin Zayed al-Nahayan, who is also the ruler Abu Dhabi. There's no greater symbol of the shifting fortunes in the Gulf than the surprise renaming of the world's tallest building in Dubai after the leader of Abu Dhabi, who bailed out the city-state. For years, the United Arab Emirates' capital Abu Dhabi played the role of rich but bland neighbor as flashy Dubai strutted to international stardom. That all changed when the bills came due. Abu Dhabi sent a total of $25 billion to Dubai last year to help the former boomtown fend off creditors after the global recession brought growth to a standstill. The white knight rescue further reinforced Abu Dhabi's image as a hub of serious power and ambitions - a place that forged deals for satellite branches of the Louvre and Guggenheim while Dubai plotted fantasy cities in the desert. But Monday's fireworks-and-laser extravaganza to open the more than half-mile (nearly 830-meter) tower offered the first hints that the bailout money to Dubai may come with strings attached. Abu Dhabi's rulers now hold the leverage to exert more control over Dubai's economic policies.
