'Dubai govt won't guarantee Dubai World debts'

Dubai, Dec 1: Giving disappointing news to those who are hoping for a quick recovery in Dubai from the debt crisis, a top Dubai government official said that the government will not guarantee or back Dubai World's debts.

"I think banks are not at a stage where they need any extra liquidity from the central bank," Abdulrahman al-Saleh, director general of Dubai's department of finance, said on Dubai TV.

Adding that the creditors will be affected in 'the short term' by the conglomerate's restructuring, the official claimed that market reaction to Dubai World's announcement was exaggerated in comparison to the magnitude of the conglomerate's problems.

"Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the government, which is not correct," he added.

Last week the news of Conglomerate Dubai World asking creditors to delay repayment of debt for itself and property developer Nakheel for six months as it restructured operations, sent shock waves across global markets.

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