IMF hails UAE's move to address Dubai crisis

I / Washington November 30, 2009, 11:22 IST

The International Monetary Fund has welcomed the decision of the United Arab Emirates to come to the rescue of its banks in Dubai and said it is monitoring the situation that took the world market by surprise.

"We welcome today's announcement by the Central Bank of the UAE making available to banks a special additional liquidity facility," the IMF said in a statement on Sunday amid concerns about excessive borrowing around the world.

The IMF's comments came after the United Arab Emirates decided to give money to its banks struggling in Dubai.

"We look forward to further clarification by the authorities towards a cooperative mechanism to address the issues between these debtors and their creditors," it said.

"We are continuing to monitor the situation following the unexpected announcement by the Government of Dubai regarding a standstill on the debt of Dubai World and its Nakheel subsidiary, which has had an adverse impact on financial markets," it added.

Meanwhile, in a news report The New York Times said the UAE central bank's move was an attempt to head off the kind of crisis of confidence that froze credit markets last year and brought the global economy to the brink of failure, threatening everyone from hedge fund billionaires to retirees who had their savings in supposedly safe investments.