Not responsible for Dubai World debts: Dubai

The Dubai government has said that it was not responsible for the debts of its stricken company investment arm Dubai World. The statement has come as a nasty shock to creditors' who have been assuming all along that the Arab emirate would assume the conglomerate's liabilities.

According to Abdulrahaman al-Saleh, director general of Dubai's department of finance, creditors need to take part of the responsibility for their decision to lend to companies. He added that creditors who have been thinking that Dubai World was part of the government are wrong.

In its first statement since the crisis struck, Dubai World the government-controlled holding company at the heart of the storm, said a restructuring would involve $26 billion in debt and mostly affect its property firms, Nakheel and Limitless.

Other firms including DP World, Jebel Ali Free Zone and Istithmar World being financially stable need not be included in the restructuring, the company said in a statement released by e-mail late on Monday night.

Meanwhile, the dollar fell on Monday following a pledge for support to Dubai banks eased concerns of investors about Dubai's debt problems. The dollar was down against a currency basked for a fifth straight month.

The US currency started declining in Asia as equities advanced on a pledge by the central bank of the United Arab Emirates to extend emergency support to Dubai's banks.

Dubai's oil-rich neighbor, Abu Dhabi has also offered to provide support on a selective basis to Dubai companies