Another credit crunch in the UAE?
An Emirati man follows the stock market activity at the Dubai Financial Market in the Gulf emirate on January 20, 2010. The total debt of cash-strapped Dubai could be as much as 170 billion dollars, much higher than earlier reported, according to a report by EFG-Hermes regional investment bank.
Dubai may be slowly getting back to business after the country's 2009 credit crisis sent investors running for the sand dunes, but some UAE residents have amassed mountains of their own debt, according to a new survey.
The amount of money owed, from credit card payments to automobile loans, is staggering.
More than 25 percent of residents in the Gulf sheikhdom have over $68,000 in personal debt, according to a survey conducted by the Dubai-based Arabian Business news website.
The findings also show that 40 percent of UAE residents owe between $27,000 and $54,000.
The survey results may not be the most accurate snapshot of the UAE, but they can offer some insight into an apparent culture of carefree spending in one of the world's richest nations.
Some of the finding of personal debt owed in the UAE, according to Arabian Business:
- 12% of residents own more than six credit cards
- Almost 25 percent of residents owe more than $27,000
- One-fifth of all UAE debtors had no idea how much money they owed
Perhaps one of the most shocking finds is that a vast majority of UAE residents with debt (80 percent) reported that they had received "threatening calls" from the state police inquiring about their payments.
The Arabian Business survey sampled only a very small number of residents, and it did not specify who was interviewed – Emirati citizens or expats.
Only around one-quarter of the UAE's roughly four million residents are Emirati citizens. The rest are foreign expatriates who live and work in the UAE, often without needing to pay taxes at home.
But as the New York Times reported during Dubai's slowdown, many expats in the UAE ran into financial trouble when their companies began layoffs.
Many of them fled the country, leaving their flashy vehicles – which were still unpaid for – at the airport with keys in the ignition.
With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have maxed-out credit cards inside and notes of apology taped to the windshield.