Abu Dhabi gives Dubai $10 billion to cover debt

The Dubai government said on Monday that Abu Dhabi has agreed to give $10 billion in emergency funds that will go toward paying debts owed by its Dubai World conglomerate.

It said $4.1 billion of the money will be used to pay off the debt from Dubai World's Nakheel property divisions that are due today (Monday).

Announcing this, Sheikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee, said the UAE central bank, based in Abu Dhabi, is also prepared to support local banks.

He said the remaining funds would be used for interest payments and working capital of Dubai World through April 30, 2010 on condition that the company successfully negotiates a standstill agreement with creditors as earlier announced.

On November 25, the Dubai government said the state-run holding company is seeking a 'standstill' agreement on its debt, including for the Nakheel unit.

Al Maktoum said the government of Dubai would announce a comprehensive reorganisation law, a framework that is based on internationally accepted standards for transparency and creditor protection.