The reaction to the Dubai debt crisis is "overblown" and banks in the United Arab Emirates have sufficient capital and liquidity to handle the situation, dpa quoted two officials as saying today. "There is confusion and ambiguity between the indebtedness of some local companies and debt the Dubai government," said Dahi Khalfan, who heads the commission for Dubai"s governmental budget for 2010. "The government"s debt is almost negligible," he added, in relation to the sovereign obligations. He also said the UAE banks were "strong." Earlier, speaking with Dubai TV, Abdel-Rahman al-Saleh, the director of Dubai"s Department of Finance, said the global reaction to the decision of Dubai World to ask for a six month delay in paying its debts was "overblown." He admitted, however, that "creditors will be affected in the short term" saying "lenders must bear part of the responsibility." Al Saleh said banks had enough liquidity to handle the crisis. The UAE central bank said late Sunday, in its first policy response in what appeared to be an effort to calm investors and creditors, that it would supply liquidity to the banks in the country to help cushion any fallout from Dubai World, which has 59 billion dollars in liabilities.
