Pakistan lose Billions in Dubai

Dr Murtaza Mughal, President of Pakistan's Economy Watch said on Saturday that a host of Pakistani businessmen have lost billions of dollars of investments in speculator-oriented Dubai real estate property downturn.

"Those who lured Pakistanis by showing them golden dreams of rich returns by investing in the oil-poor emirates have walked away silently, leaving the Pakistani businessmen in the lurch. These include salesmen, so-called developers, intermediaries and bankers, etc who must be brought to book," said a report issued by the Pakistan Economy Watch.

The report, titled "Overseas Risk Report", added that the shares of top property giants in Dubai have fallen as much as 85 per cent bringing many mega projects to a halt. "Many local and foreign companies have opted for mergers to avoid bankruptcy.

The giants are cutting expenses, plans and number of employees," the report added.

It said the losses in the realty sector were roughly equal to that of the GDP of Dubai. The government of United Arab Emirates UAE) is pumping billions to avoid the failure and $30 billion have been pumped in to the banking system and selling of some highly acclaimed assets is under serious consideration. Dubai is facing losses to the tune of hundreds of billions of dollars and risk of defaults, despite government assurances. The situation has resulted in stock exchange crash, dried up credit and shaky wealth funds. Banks have minimized limits of credit cards and are mulling their ability to enforce foreclosures.

"The UAE has already lost $100 billion in the global crunch and it has only $500 billion of assets," said the report, adding that it was already under stress due to some 60 per cent slide in oil prices.

"The plans to make Dubai a hub of financial activities may not realise as attempts for unnatural growth result in such a situation," he added.

Interestingly, Pakistan grudgingly accepted an IMF loan recently - at a meeting held in Dubai.

In order to secure an IMF loan, Pakistan’s government and central bank have agreed to eliminate electricity subsidies by the end of June 2009 and to continue to adjust fuel prices to reflect international prices. That should reduce the budget deficit as a proportion of gross domestic product to 3.3 percent by 2009-10 from 4.2 percent in 2008-09 and 7.4 percent this year, the IMF said. Pakistan was forced to turn to the IMF for a bailout after its foreign reserves shrunk 75% this year to $3.45 billion.