The Government of Dubai’s Department of Finance on Thursday released a report which highlights how it overcame the 2009 global financial crisis.
The report is an interesting explanation of how active and bold place management can overcome financial problems. It does not explicitly mention the risks that were taken but it can be read in-between the lines. There are seven major lessons:
Lesson one: There is a need for constant readiness for a crisis, particularly when the economy is passing through prolonged periods of prosperity and growth as mistakes are overlooked, accumulated and leading to a crisis, and therefore caution should be taken and periodic reviews of monetary and fiscal policies should be done.
Lesson two: Globalization needs to be developed and strengthened rather than abolished as well as strengthening the global financial institutions and the speed of response of countries around the world to coordinate their efforts to cope with the crisis.
Lesson three: Governance means re-Governance of the government sector, the private sector as well as financial institutions and increasing the control of the Central Bank on the activities of financial institutions, and reviewing many of the credit rating agencies since this classification was one of the reasons for trading in weak securities which contributed to increasing the bubble.
Lesson four: Adoption of clear and strict fiscal policies in dealing with public debt and budget deficit levels to restrict it and increase the efficiency of government spending through the creation of a government entity specializing in public debt.
Lesson five: Contracting the financial system with higher levels of supervision and regulation, since the expansion of the financial system over the real economy creates false inflation and eases the introduction of samples into the market facilitating the collapse of these markets.
Lesson six: Review foreign investments which were negatively affected with the move towards domestic investment and that applies to most Arab countries, especially the Gulf who lost many of its foreign investments.
Lesson Seven: The expansion of investment and raising the efficiency of operational spending while focusing on investment spending. Dubai benefited from this lesson and worked accordingly which had a great impact on the speed of economic recovery in the UAE.
The report can be downloaded by clicking on the link below. Read the report from page 26 and in reverse for the English version.
Conclusion from Dubai Lessons from the Global Financial Crises
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