A report by Reuters said that the Emirate of Dubai is preparing for a financial strike, at a time when the Corona virus is afflicting the tourism sector, which constitutes 11% of the emirate's GDP.
Reuters added that the Corona virus began to deal a painful blow to Dubai - one of the most attractive cities for visitors in the world - as some hotels closed their doors, while occupancy rates fell to the lowest 10% in other hotels.
The Reuters report said the outbreak had renewed concerns about the high-borrowing public finances of the emirate.
The agency quoted financial sector analysts and sources as saying that the epidemic may force the government to seek a rescue package similar to the one offered by oil-rich Abu Dhabi after a financial crisis in 2009.
"We expect the difficult times to continue for months, probably the entire 2020," it quoted a manager at one of Dubai's most famous hotels as saying.
According to the Reuters report, the World Travel and Tourism Council said Dubai was the world's third most attractive city for direct international tourism spending by $ 28 billion in 2019. The government said that more than 16 million tourists visited the city last year.
The spread of the disease is also endangering the World Expo 2020, which Dubai is preparing to host from October. The exhibition aims to attract twenty million tourists.
Emirates Airlines, owned by the emirate’s government, suspended passenger flights even before the country decided late on Tuesday to suspend it, except for evacuation flights.
Debt story
"If these measures (aimed at fighting the virus) continue for about three or four months, they will be deducted from 5% to 6% of Dubai's GDP," said James Swanston, Middle East and North Africa economist at Capital Economics, according to the Reuters report. .
He added that Dubai is the most sensitive economy in the Middle East to the travel restrictions caused by the Corona virus, and that government companies may have to resort to debt restructuring or request assistance from the capital Abu Dhabi.
Capital Economics estimates that the debt burden of Dubai amounts to approximately $ 135 billion (125% of gross product), with maturities of nearly half of it before the end of 2024.
Abu Dhabi last year extended for the second time a ten-billion-dollar loan facility it provided to Dubai during the global credit crisis that witnessed the collapse of the emirate's real estate market.