Dubai has eased its alcoholic beverage laws to allow tourists to buy alcoholic beverages in state-controlled stores, which were previously only available to residents with a license.
The new laws, which allow visitors to Dubai to obtain permits for alcoholic beverages for the first time, amid a large-scale economic slowdown affecting the emirate, which faces the risk of a total collapse.
The UAE is seeing its first decline in alcohol sales in volume in a decade, the Associated Press said.
Market research firm Euromonitor International said in a recent report that the UAE “faces tough challenges as changes in consumer buying behavior and demographics are affecting sales”.
Government profits from alcoholic beverages are increased as there is a 50% import tax on a bottle of alcohol, plus a 30% surcharge in Dubai for purchases from liquor stores.
The government-owned Dubai Duty Free sold more than $ 2 billion of goods last year alone to those who pass through airport terminals, including 9 million cans of beer, 3 million bottles of whiskey and 1.5 million bottles of wine. No alcohol license was required.
The country’s major liquor chains are Maritime and Mercantile International, a subsidiary of state-owned Emirates Airlines, and African & Eastern, which has not responded to the request for suspension, is believed to be at least partially owned by the state or its affiliates.
Bars and nightclubs in Dubai are strictly limited to working within or connected to hotels – even beverage receipts at Dubai International Airport appear to be coming from a hotel attached to the airport.
But even with these restrictions, institutions offering alcoholic beverages always seem to be full on Thursday nights, the start of the UAE weekend.
But slowly this began to change. The fall in global energy prices, the depreciation of the Dubai property market by 30%, and fears of a trade war, led to the decline of employers in the city jobs. Parking does not look as full as before.
Emiratis reject the continued sale of alcohol on their land as an Islamic state prohibits the sale or consumption of alcohol.
The overall economic crisis in the emirate of Dubai is worsening and setbacks are escalating in an unprecedented way to reach major companies and banks amid a government inability to find solutions.
The banking sector in the UAE is in a silent crisis amid the rise in the volume of Dubai’s debt to $ 124 billion, after postponing the payment of half of it for the remainder of the next year and two years, in a crisis that may explode at any moment, according to observers’ estimates.
The Director General of the Department of Finance in the Emirate of Dubai Abdulrahman Saleh acknowledged that the sovereign debt of Dubai amounted to 32 billion dollars, and that the ratio of public debt to GDP of the emirate does not exceed 27.9 percent until the end of last September, while the ratio of debt service only 5 percent of the general budget.
When needed, Dubai is considering borrowing and securing financing for infrastructure projects through various means of financing, including bonds, sukuk, export guarantee, securitization and other means, to support infrastructure projects rather than operational spending, Saleh said.
“Expansion spending on infrastructure projects in Dubai is a top priority for the public budget to ensure completion as required and ahead of schedule.”
Saleh pointed out that the government of Dubai reduced some government fees in June 2018, out of its keenness to support the business sectors, stressing that this reduction has had little impact on the performance of the government budget, although it led to a decline in revenues by about two billion dirhams over 12 Months to June of this year.
According to Fitch, about $ 23 billion of these debts are borne by the UAE’s banking portfolios, and it is not yet known how government companies in Dubai will deal with these debts, and whether banks in the UAE will bear a new debt restructuring process, as happened during the crisis. Finance 2008.
Meanwhile, companies affiliated with the Dubai government have begun to formally acknowledge their financial crisis and that international commercial banks no longer trust them.
In the past decade, the emirate of Abu Dhabi was forced to rescue Dubai through a $ 20 billion loan at the time. Dubai has repaid only $ 10 billion, and banks have already started to schedule $ 3 billion of debt with real estate and construction companies, including Al Jaber.
This crisis comes at a very different time from the previous financial crisis experienced by the emirate of Dubai, where according to a report in Forbes magazine, this time, in addition to the collapse in the real estate sector, suffers from low oil prices and the crisis of geopolitical turmoil and military tension in the Gulf region.
Fitch said in a report that a significant portion of the $ 23 billion in loans to state-owned companies in Dubai is borrowed by the end of 2021.
According to the US rating agency, Dubai may be forced to schedule these debts and put banks in distress amid a confrontation of an imminent collapse suffered by the UAE economy due to wars and external interventions of the ruling regime in the country.