The Dubai government has admitted to a debt of $80 billion that it cannot repay. Of that debt, Dubai World, which is the flagship of the Emirate and the company behind such iconic developments as The World and Palm Jumeirah, owes $60 billion. Just a year ago, the Dubai government was proudly announcing its resilience against the global market downturn. And Dubai World was considered one of the key drivers of the economic boom in the region.
As a result of this revelation, an estimated 400 projects worth more than $300 billion have been canceled, shut down or ordered to move slowly as developers try to cope with property prices that are still on a downward spiral. Dubai World has announced a six month stand still and said it will not be able to pay creditors until at least May 2010. The debts are frozen until at least May 2010, with accountants at Deloitte working to draw up a restructuring plan.