His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the UAE Vice-President and Prime Minister, and Ruler of Dubai, has issued the Royal Decree 24-2009 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.
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 authorised to invest in, hold and manage debt instruments on behalf of the Government of Dubai, to collect loan repayments and it may also 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 24-2009. As with all other commercial loans, the Support Fund will not disclose the names of the recipient entities. Each entity will decide whether or not 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 allocated to help it achieve its goals, revenues generated from issuing loans and investing its capital and assets revenues generated from the issuing bills, bonds and sukuks in addition to other resources provided by the Government to help the Fund achieve its goals
Entities that have already received funds from the first tranche from the Government will have their loans transferred to the Support Fund.
The Support Fund’s fiscal year starts on 1 January and ends on 31 December. 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.