Vol1 Aug 09
Dubai Financial Support Fund to sustain emirate’s economic growth
His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued the Royal Decree 24 of 2009 to launch the Dubai Financial Support Fund (‘the Support Fund’). The Support Fund will be accountable to Dubai’s Supreme Fiscal Committee (‘SFC’) and its establishment is being supported by the Department of Finance of the Emirate of Dubai.
Dubai Financial Support Fund
The Support Fund is an independent legal entity, which is being established with the specific purpose of providing financial support and liquidity to Government and Government-Related Entities (‘GREs’) undertaking projects of strategic importance within Dubai that contribute towards the overall economic development of the Emirate. The Support Fund is authorized to invest in, hold and manage debt instruments on behalf of the Government of Dubai, to collect loan repayments and it may re-invest these revenues. Furthermore, the Fund will provide loans and credit facilities on a commercial basis to Government and GREs, which meet SFC-approved criteria in accordance with the Royal Decree 24 of 2009. As with all other commercial loans, the Support Fund will not disclose the names of the recipient entities. Each entity will decide whether to release details of its support.
The Support Fund can issue financial instruments, including bonds and sukuks, inside and outside the Emirate on behalf of the Government of Dubai, invest in commercial projects, establish investment funds and manage institutions and corporates in order to provide liquidity for strategic projects of entities applying for funds. The Fund can also acquire partial or whole stakes in institutions and companies that are deemed to be in line with the overall strategic objectives of establishing it.
The Support Fund’s financial resources come from the first $10bn tranche of the $20bn bond programme launched earlier this year. Entities that have already received funds from the first tranche from the Government will have their loans transferred to the Support Fund.
Members of the Boards of the Support Fund
Sheikh Mohammed, through the Royal Decree 41 of 2009, has appointed the Chairman and Members of the Board of the Dubai Financial Support Fund. HE Abdulrahman Al Saleh, DG, Dubai’s Department of Finance was appointed as Chairman while Abdulaziz Rahmah Al Muhairi, MD, Investment Corporation of Dubai, it Deputy Chairman. The members of the board are; Eng Mattar Mohammed Al Tayer, Chairman of the Board and Executive Director, RTA; Majid Saif Al Ghurair, Chairman, SHUAA Capital, and Dr. Riad Mohammed Khalfan Belhoul, Legal Counsel. HH Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman, Executive Council has issued the Executive Council Decree 19 of 2009 appointing Marwan Iqbal Abedin as the Executive Director of the Dubai Financial Support Fund with the responsibility for managing the daily operations of the Support Fund.
The Support Fund’s Board
The Support Fund’s Board will be responsible for establishing general policy for the Fund & its subsidiaries and defining its projects & programmes, obtaining loans & financing, establishing institutions, companies, commercial projects & subsidiaries and buying & selling assets and equities. It will also be responsible for recommending criteria for applicants requesting loans, proposing suitable applicants in the form of strategic projects or companies, and recommending them to SFC. The criteria depend on the strategic importance of the projects and applicant entities and their role in sustaining the Emirate’s economy on the long term. It will also adopt financial, administrative and technical regulations and submit them to the SFC for approval.
The Role of the Dubai Supreme Fiscal Committee (SFC)
The SFC was established in October 2007 and has overall responsibility for overseeing Dubai’s fiscal policies. The SFC will review and approve the loan criteria needed to grant the financial support to government entities, strategic projects and GRE’s in the Emirate. It will also appraise applications recommended by the Fund’s Board, and determine the size and terms of each loan and the nature of the related securities and guarantees.
HH Sheikh Ahmed bin Saeed Al Maktoum is the Chairman of the SFC. It has the following Board Members: HE Mohammed Al Shaibani, Deputy Chairman, SFC and CEO, Investment Corporation of Dubai; HE Abdulrahman Al Saleh, DG, Dubai Department of Finance; Abdulaziz Al Muhairi, MD, Investment Corporation of Dubai and HE Dr Omar Bin Sulaiman, Governor, Dubai International Financial Centre.
The Support Fund’s fiscal year starts on January 1 and ends on December 31. The first fiscal year began upon the issuance of the decree and will end on 31 December 2010. The Fund will be subject to external audit and an auditing firm will be appointed by the SFC.
The launch of the Support Fund is reassuring for Dubai’s economy. However, there is need for more transparency regarding how much has been disbursed, who are the beneficiaries and how much of the fund is left.
Dubai Financial Support Fund
The Support Fund is an independent legal entity, which is being established with the specific purpose of providing financial support and liquidity to Government and Government-Related Entities (‘GREs’) undertaking projects of strategic importance within Dubai that contribute towards the overall economic development of the Emirate. The Support Fund is authorized to invest in, hold and manage debt instruments on behalf of the Government of Dubai, to collect loan repayments and it may re-invest these revenues. Furthermore, the Fund will provide loans and credit facilities on a commercial basis to Government and GREs, which meet SFC-approved criteria in accordance with the Royal Decree 24 of 2009. As with all other commercial loans, the Support Fund will not disclose the names of the recipient entities. Each entity will decide whether to release details of its support.The Support Fund can issue financial instruments, including bonds and sukuks, inside and outside the Emirate on behalf of the Government of Dubai, invest in commercial projects, establish investment funds and manage institutions and corporates in order to provide liquidity for strategic projects of entities applying for funds. The Fund can also acquire partial or whole stakes in institutions and companies that are deemed to be in line with the overall strategic objectives of establishing it.
The Support Fund’s financial resources come from the first $10bn tranche of the $20bn bond programme launched earlier this year. Entities that have already received funds from the first tranche from the Government will have their loans transferred to the Support Fund.
Members of the Boards of the Support Fund
Sheikh Mohammed, through the Royal Decree 41 of 2009, has appointed the Chairman and Members of the Board of the Dubai Financial Support Fund. HE Abdulrahman Al Saleh, DG, Dubai’s Department of Finance was appointed as Chairman while Abdulaziz Rahmah Al Muhairi, MD, Investment Corporation of Dubai, it Deputy Chairman. The members of the board are; Eng Mattar Mohammed Al Tayer, Chairman of the Board and Executive Director, RTA; Majid Saif Al Ghurair, Chairman, SHUAA Capital, and Dr. Riad Mohammed Khalfan Belhoul, Legal Counsel. HH Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman, Executive Council has issued the Executive Council Decree 19 of 2009 appointing Marwan Iqbal Abedin as the Executive Director of the Dubai Financial Support Fund with the responsibility for managing the daily operations of the Support Fund.The Support Fund’s Board
The Support Fund’s Board will be responsible for establishing general policy for the Fund & its subsidiaries and defining its projects & programmes, obtaining loans & financing, establishing institutions, companies, commercial projects & subsidiaries and buying & selling assets and equities. It will also be responsible for recommending criteria for applicants requesting loans, proposing suitable applicants in the form of strategic projects or companies, and recommending them to SFC. The criteria depend on the strategic importance of the projects and applicant entities and their role in sustaining the Emirate’s economy on the long term. It will also adopt financial, administrative and technical regulations and submit them to the SFC for approval.
The Role of the Dubai Supreme Fiscal Committee (SFC)
The SFC was established in October 2007 and has overall responsibility for overseeing Dubai’s fiscal policies. The SFC will review and approve the loan criteria needed to grant the financial support to government entities, strategic projects and GRE’s in the Emirate. It will also appraise applications recommended by the Fund’s Board, and determine the size and terms of each loan and the nature of the related securities and guarantees.
HH Sheikh Ahmed bin Saeed Al Maktoum is the Chairman of the SFC. It has the following Board Members: HE Mohammed Al Shaibani, Deputy Chairman, SFC and CEO, Investment Corporation of Dubai; HE Abdulrahman Al Saleh, DG, Dubai Department of Finance; Abdulaziz Al Muhairi, MD, Investment Corporation of Dubai and HE Dr Omar Bin Sulaiman, Governor, Dubai International Financial Centre.
The Support Fund’s fiscal year starts on January 1 and ends on December 31. The first fiscal year began upon the issuance of the decree and will end on 31 December 2010. The Fund will be subject to external audit and an auditing firm will be appointed by the SFC.
The launch of the Support Fund is reassuring for Dubai’s economy. However, there is need for more transparency regarding how much has been disbursed, who are the beneficiaries and how much of the fund is left.
