Dubai has reached an agreement with Abu Dhabi and the United Arab Emirates' central bank to extend payment of $US20 billion ($A22.23 billion) of debt due this year.
Dubai built up tens of billions of dollars in debt during a building boom but struggled to repay it as the global financial crisis battered its economy and property market.
Dubai is one of seven emirates in the UAE.
The UAE's official WAM news agency reported on Sunday the deal gives Dubai five more years to repay the debt at a fixed interest rate of 1 per cent. The term is renewable.
The debt consists of a $US10 billion loan from the oil-rich emirate of Abu Dhabi, which is also the UAE's capital city, and another $US10 billion in central bank bonds.
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