Looming Debt Challenges with Dubai Expo 2020

World Expo

Following Dubai winning its bid to host the World Expo 2020, there’s been a lot of celebration and optimism around the event. Yet, with the high cost of hosting such an event, financial experts are turning their focus to the elephant in the room, the emirates debt. At the moment the emirates debt is estimated to be around US $103 billion, and is expected to increase with renewed borrowing needed to fund projects for the Expo.

With an estimated $43 billion needed in infrastructure projects to prepare for the Expo, the government of Dubai has indicated that a considerable amount of funding for the event will probably come from borrowing, most likely from state-linked firms. According to the IMF, the borrowing is expected as the emirate is set to pay off $85 billion in debt before 2017.

Even though Dubai has been curbing its levels of debt since Dubai World, a state-controlled firm, called for a freeze on $25 billion of debt in November 2009, the levels of government debt and state-owned companies is still quite sizable, having increased by $13 billion from last year to almost $103 billion, as according to estimates by Barclays.

Yet with the overall excitement from Dubai winning the bid for the Expo, along with gains in the economy, have, within the bond market, helped push Dubai’s credit to right levels. Yet, these high levels of debt could increase borrowing costs for Dubai.

However, a great deal of focus is being targeting on $20 billion of debt which was borrowed from the government of Abu Dhabi and other domestic institutions as a result of the financial crisis in 2009. The total amount comes from $10 billion borrowed from the Central Bank, $1 billion split between two banks in Abu Dhabi, and another $9 billion from the government of Abu Dhabi. The good news is Dubai is on track to paying back the debt and there are no talks to refinance the debt with Abu Dhabi.

But it’s not just the government that’s coping with debt; many state-owned companies are also facing debt payments, which are coming up. Dubai Group is still restructuring $10 billion of debt, aiming for repayments to be within the next three to 12 years. Dubai World is also coping with debt, but has managed to deal with a $4.4 billion loan due in two years by selling off some of its assets.

Yet, companies such as Borse Dubai, with $1.8 billion in loans due, and Nakhell with $1.9 billion, are expected to be refinancing according to a recent report by Barclays.

Even though the debt repayment schedule looms over Dubai, most companies are going to be able to pay back the loans, and those who aren’t will simply refinance those loans, while all companies are expected to borrow again in the next year to prepare for the Expo and make the proper investments, which should turn by 2020. So for now there’s little need to worry as the recovery from the 2009 financial crisis is still taking its course, all while Dubai’s economy continues to grow and show no signs of stopping. That being said, now is the right time to start thinking about new investment opportunities in anticipation for an economic boom from the Expo. So talk to Globaleye and find out what’s right for you and your portfolio.

The Necessities of Emergency Planning and Saving

The Necessities of Emergency Planning and SavingSure, you save; in the financial world it’s a must. But most financial advisors will focus more on long-term investing and retirement plans, rather than give the proper emphasis on emergency planning, which for some reason always seems to get put on the back-burner.

Of course your Roth IRA is important, and so are your other investments. But all too often when something unexpected arises, most people aren’t prepared financially or logistically, which is made apparent after natural disasters, such as Typhoon Haiyan, Hurricane Sandy and and numerous other disasters, small and large, natural and financial, that no one thought would happen to them. So in the name of preparedness, below are some tips that you should take so you’re not caught off guard and ensure your retirement fund will be there to enjoy.

1) Always have cash

From disastrous storms, to the banking crisis in Cyprus, one thing to remember is most likely credit cards won’t be an option for payment and ATMs won’t be working, so as the saying goes, “cash is king.”

It’s always a good idea to have a couple hundred dollars stashed away, because if you aren’t fully prepared and need more supplies, it’ll probably be your only means of getting water, fuel and food.

2) Have an emergency kit.

Most recommendations for an emergency kit include enough food and water for no less than three days, along with tools and a first aid kit (which can be bought easily online). Emergency kits include those basic items, along with flashlights and a radio so you can still hear any news on emergency broadcasts. If you are unsure about building your own kit, you can buy one here from the Red Cross.

3) Stock up on non-perishable foods

As mentioned before, most basic emergency kits only cover three days, so if there’s a real disaster, you’re going to need to be prepared and have plenty of food and water. Canned foods are always a safe bet because they last a long time and are generally ready to eat right away (if there’s no gas or means of cooking anything), so it’s very important to take into account you may not have the luxury of being able to heat a pan or boil water, which means rice and pasta, which do store well, may not necessarily be a good option.

Plus, you can always eat the food that was bought first and keep replenishing the supply so you’re always prepared and not sitting on a decade of old canned foods covered in dust. And even if it’s not an emergency, having some food stored away can be very helpful when going through a period of unemployment and saving is even more important.

4) What does your insurance cover?

Live in an area prone to natural disasters? Know which ones might be of risk and make sure you have personal insurance to cover it; from auto, health, disability, to homeowner’s or renters insurance, it’s an absolute must because the last thing you want is to have all your hard-earned savings drained having to replace something damaged or lost because it wasn’t insured.

Also, if you’re the main provider for your family, make sure your life insurance will be enough to support them. And if you have a considerable amount of assets, looking into long-term care insurance and umbrella liability is a good idea

5) Save some for a rainy day

Not all savings in you bank have to be specifically for a disaster, because an emergency doesn’t always mean you’re safety is dire straights, it could just mean you’re unemployed and need to fall back on some cash reserves until you’re back on your feet. As the financial crisis during 2008 demonstrated in Dubai, having enough money saved to cover mortgages and loans can mean all the difference, and Globaleye can help every step along the way to make sure you’re prepared

 The amount recommended for your emergency savings varies, depending on the individual’s financial situation and the stability of your income. In general, having six months of salary stashed away is a good goal to have, and focus on fulfilling that goal before paying off debt. It’s also wise to keep these funds in an insured bank or credit union, that way you can be collecting interest with no risk. That, or using a Roth IRA can suffice; traditionally it’s not used this way, however you are always able to withdraw the sum of your contributions at anytime without paying any penalty. And the latter option proves to be a great call because if there’s no need to pull out these funds early, you can simply invest more rigorously for retirement.

The bottom line, be prepared so your hard-earned money isn’t needlessly expended when it could’ve been prevented. And don’t only think in terms of a disaster, also keep in mind unexpected unemployment which could always come at the least convenient time, because your ultimate goal should be a stable and fruitful retirement with good investment returns.