Financial crisis under control, says Khalifa

President acknowledges problems but assures nation it will get through them and extend help to countries in trouble.

ABU DHABI // The impact of the global financial crisis on the nation has been misunderstood and exaggerated, said Sheikh Khalifa, President of the UAE. Although the President acknowledged that the credit crunch was affecting the country, he said the UAE would weather the storm and help suffering countries.

Sheikh Khalifa's remarks were reported yesterday by the state news agency WAM, and came during an interview with Alrroya, a new Abu Dhabi-based daily business newspaper to be launched today. "Although we are victims of the global financial crisis and are paying a price, according to readings and analyses, we have worked with the international community to help the countries hit by this crisis," he said.

"We also worked within the Gulf Co-operation Council towards shaping a collective position on the crisis." Sheikh Khalifa said the depth of the crisis in Dubai had been exaggerated, and denied that the Government of Abu Dhabi had sought to purchase Dubai-owned companies badly affected by the financial turmoil. "There were misinterpretations of the relationship between emirates, who are members in the UAE federation," the President said. "We are members in one entity and parts in one strong, coherent body."

The country and its banks will solve the problems caused by the sudden unavailability of easy credit that had shaken economic institutions across the world, he said. The Government followed the lead of other major financial centres in February by injecting Dh16 billion into the emirate's five largest banks. Compounding the banking problems, oil prices have fallen to less than $50 per barrel, from highs of more than $150 last year.

The brief surge in oil prices was reflected in the UAE's increased budgets in 2008. However, the extra profits from higher oil prices had allowed more to be spent on projects that would help Abu Dhabi diversify its economy, Sheikh Khalifa said. "The federal budget has seen a remarkable increase and maintained balance despite the rise in expenditure." To prevent the wide fluctuation in oil prices, Sheikh Khalifa called for a mechanism to control the world oil market to prevent speculators from driving up oil prices in the search for quick profits.

And, the President added, taxation has become a burden "more heavy than that of the original price of oil". [e-mail]