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The UAE cabinet on 2 June approved the draft law for the 2003 federal budget, with total revenue set at Dh21.07bn ($5.74bn), total expenditure at Dh23.28bn ($6.34bn) and a resulting deficit of Dh2.21bn ($$60mn). To come into effect the budget law will have to be issued by UAE President Shaikh Zayid bin Sultan Al Nuhayyan. The deficit in 2003 represents a 1.8% increase on the previous year, while revenue and expenditure are only marginally higher.
UAE Budget: 1997-2003
(DhBn)
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2003
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2002
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2001
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2000
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1999
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1998
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1997
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Expenditure
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23.28
|
23.16
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22.66
|
23.12
|
22.91
|
21.39
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19.86
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Revenue
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21.07
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20.99
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20.43
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20.68
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20.43
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19.63
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18.87
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Deficit
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2.21
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2.17
|
2.23
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2.44
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2.48
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1.76
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0.99
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The Minister of State for Financial and Industrial Affairs, Muhammad Khurbash, said the new budget sought to provide a suitable standard of services for all citizens and residents in the UAE and to achieve a satisfactory level of social development. It was drawn up, he added, in a novel way so as to incorporate a three-year plan (2003-05) for government expenditure, prepared with the assistance of the UNDP and other organizations. The minister also said that contributions from various emirates in 2003 remained at the same level of Dh13.69bn ($3.73bn) as in the previous year.
The new budget allocates Dh8.3bn ($2.26bn) for salaries and wages, up from Dh8.16bn ($2.22bn) in 2002; Dh 5.87bn ($1.6bn) for education, up from Dh 5.71bn ($1.55bn); Dh1.8bn ($490mn) for social services, up from Dh1.79bn ($487mn); and Dh1.7bn ($463mn) for health, up from Dh1.68bn ($457mn). The oil price assumption for oil revenues in 2003 was not disclosed.
Although the UAE economy has performed well since the mid-1990s with its market oriented-growth strategy, the International Monetary Fund (IMF) pointed out in its 2002 Article IV consultations that fiscal vulnerability to weakening oil prices had increased, threatening the country’s medium-term economic outlook (MEES, 24 March). The IMF estimated a decline in GDP growth from 3.8% in 2001 to 1.5% in 2002, mainly as a result of a decline in hydrocarbon revenues of some 9.4%. The IMF also urged the UAE authorities to address the problem of persistent budget deficits and warned that failure to do so will put pressure on foreign assets and increase fiscal vulnerability to lower oil prices. According to data published with the Article IV consultations report, the value of crude oil exports in 2002 was estimated at $15.9bn, down from $17.7bn in 2001.
© Copyright MEES 2003.
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