No need to over-react, newspaper Khaleej Times'

A Dubai-based newspaper has said that restructuring or reform of an entity is always tough and painful, but these objectives show an organisation's seriousness of purpose in changing with the times. In its today's editorial, the English language 'Khaleej Times' said Dubai was no different. "The need to restructure Dubai World is for real, and the decision to go ahead with it indicates maturity on the part of the emirate's decision-makers. The timing of the announcement of a possible six-month delay in repaying the group's debt can be debated by market-makers, but not the intention behind it." Dubai's intentions are good, the paper continued. The government appears to have taken a hard look at the way Dubai Inc. operates, and it is committed to fixing what hasn't worked. Restructuring the emirate's flagship company is a sensible business decision, Sheikh Ahmed bin Saeed Al-Maktoum, Chairman of the Supreme Fiscal Committee, said last week. "We want to ensure resources are deployed in the full knowledge that they are used to enhance the businesses of the Dubai World Group, build on the restructuring that has already been taking place and ensure long-term commercial success," he said. "The government is acting to prevent a default, not acquiesce to one. Dubai's leadership wants to put Dubai World - and, by extension, all government-owned and related companies - on a solid financial footing. It is well known that Dubai, like so many other places, has not escaped the ravages of the economic downturn. That it now wants to repair the damage and learn from its experience should be seen positively." "Our intervention in Dubai World was carefully planned and reflects its specific financial position ," Sheikh Ahmed said. "We understand the concerns of the market and the creditors in particular. However, we have had to intervene because of the need to take decisive action to address its particular debt burden." The world is not where it was in September of last year when Lehman Brothers investment bank folded up with an overall exposure of more than $1 trillion, roiling markets and triggering global financial mayhem. Dubai World's debts are at $59 billion. In other words, they matter little in the overall scheme of things. Looking back at last week's turmoil in financial markets, one could ask whether it was a case of overreaction on the part of conservative market men, who were looking for signs of an already overdue correction and treated Dubai's announcement as a catalyst. The global markets have begun settling down after a worldwide sell-off in shares. New information on Dubai World's debt, which is likely to become available this week, should help further soothe the frayed nerves in global equity markets. Top European lenders with significant exposure to Dubai have been muted at best in their responses, strongly suggesting that financial markets are not going to fall apart. For Dubai World's creditors, the financial pain of not getting paid for six months is real, but it's also relative. The government is asking for some breathing space to help ensure the full repayment of the money Dubai World and its subsidiaries owe. Lenders should work with it. – Emirates News Agency, WAM