Dubai Crisis
Dubai crisis has been caused by the huge debts that the country has been unable to repay. The total debts are 80 billion. The government borrowed the money to finance its contracts. Due to the financial crisis in the international market, the country was unable to repay the debts. The country has appealed to its creditors to freeze repayment of the debts for six years but the banks have declined. This situation has been worsened by the international financial meltdown of economies. Spillover effects have been experienced in other sectors of the economy and the country is experiencing a decline in most of its economic activities.
Q. 2
The country has lost the funding of its major projects which are the major sources of income. The creditors to the 80 dollar debt have declined the suggestion by the government to freeze repayment of the loan for six years. Most of the projects that the companies had started have lacked adequate funding. Massive unemployment has been experienced by people in the country due to the crisis. Other sectors of the economy have been affected by spillover effects of the crisis and the economy is declining.
Q. 3
The U.S. subprime mortgage affected the banking systems in the country and other economies. Banks in Dubai depend on the US banks for loans. The decline in the US sub prime mortgage reduced the lending capacity of the banks. Banks in Dubai cannot give loans to the people due to reduction in lending capacity. The industries in Dubai have lacked adequate loans to conduct business. This has resulted in poor performance in the economy.