Dubai announces board that will disperse $20 billion in Abu Dhabi rescue funds

Gulf News rather cryptically reports,

The Dubai Financial Support Fund was established by Decree 24 of 2009 on July 21 as an independent legal entity to manage the proceeds of the Dubai Government's $20 billion (Dh73.5 billion) bond programme, or any other bond issues.
...
The board's principal duties include the responsibility for establishing the Support Fund's operating policies and procedures and for recommending to the SFC the criteria to assess loan applications by Government and Government-Related Entities ('GREs'). The board will nominate the strategic projects to be financially supported. It will also adopt financial, administrative and technical regulations.

No mention of where the money came from or that it is related to the economic downturn. Or the private finance market's concern over the transparency of the Fund's decisions.

The Abu Dhabi-sponsored The National brings clarity:

“The new board’s primary duty will be to prepare and adopt the criteria to be used in the allocation of funds for Dubai’s strategic revenue-generating projects.”

Dubai has already borrowed $10bn from the Central Bank and plans to issue bonds to raise $10bn more, as it races to keep key infrastructure projects rolling and make payments on an estimated $80bn in debt in the face of falling property prices and tight credit.
...
The slump has contributed to a dramatic slowdown in economic growth across the UAE, with economists predicting the economy will shrink slightly this year amid lower oil prices and rising unemployment in the property and construction sector.

And The National's reporter Wayne Arnold perceptively adds this:

Mr Abedin, the fund’s new executive director, is a relative unknown. A former Merrill Lynch banker, he was at ENSEC in 2005 when it announced the UAE’s first AAA-rated, asset-backed securitisation, which was $350 million of notes backed by mortgages owed by buyers of villas, townhomes and apartments at Nakheel’s Palm Jumeirah, where prices have fallen more than 60 per cent from their peak.

The mortgages were issued by Tamweel, formerly one of the UAE’s two largest home lenders. Tamweel ceased lending operations last November and remains inactive pending a decision by the Government on whether to merge it with its fellow mortgage lender, Amlak Finance.

Nakheel is now expected to be one of the first recipients of the fund’s attention. Nakheel has $3.5bn in Islamic bonds due in December.

Whether Dubai intends to pay the bond in full, and if so whether it will raise the cash by borrowing it or selling off assets, have been key questions among bankers and investors.

Ouch.

Read Arnold's article.