UAE Unveils $12Bn Federal Budget For 2010
The UAE Government approved a draft budget for 2010 of Dh43.6bn ($11.87bn) on 26 October, showing an increase in federal spending of 3.4% over the previous year. This is the sixth consecutive year that the government presents a balanced budget.
Despite the negative impact of the global financial crisis and lower oil prices, the 2010 budget indicates a growth in ministries' revenues, estimated at Dh20.8bn ($5.66bn) in 2010 compared to the Dh7bn ($1.9bn) registered in 1999. The budget did not disclose the oil price assumption and did not introduce any new taxes. The government has not made yet a decision on introducing a Value Added Tax (VAT). In 2009 the proposed federal budget of Dh42.2bn ($11.49bn) envisaged a 21% increase in spending over 2008 (MEES, 3 November 2008). The Undersecretary of the Ministry of Finance, Yunis al‐Khuri, said that the contribution of Abu Dhabi and Dubai to the total federal budget has not changed from last year. Abu Dhabi's contribution is estimated at Dh17.7bn ($4.82bn), while Dubai's share is Dh1.2bn ($327mn).
The approved budget, starting on 1 January 2010, focuses on social development, education and health, which received Dh17.8bn ($4.85bn), or 41% of the total outlay. Projects in schools and higher education are to receive Dh9.8bn ($2.67bn) or 22.5% of the total. The Ministry of Health will receive Dh2.8bn ($762mn), or 6.4% of the total budget outlay, up by Dh140mn ($38mn) on last year’s figure. The UAE government has renewed its commitment to development of infrastructure and economic resources, with Dh7.6bn ($2.07bn), or 17.5% of the total, earmarked for projects in this area, including roads, transport, medical facilities, housing and government facilities. EFG Hermes commented that overall government spending is likely to remain far more expansionary. The bank’s forecast for 2010 sees consolidated spending up by 18% from initially projected levels, encompassing higher expenditure by Abu Dhabi, Dubai and Sharjah. Given forecast higher oil revenues, the UAE’s consolidated budget surplus is expected to widen to 8.2% of GDP next year, up from 7.3% in 2009.
Mr Khuri commented that a timeline has not been set yet for a plan to sell government bonds or sukuk. The program is currently under examination and is not expected to be launched before 2010 (MEES, 27 October 2008). Legislative aspects of the launch should be met, especially the presence of a public debt law, added Mr Khuri. This law was passed by the Federal National Council in June, stipulating that public debt in the UAE should not exceed 45% of GDP or Dh300bn ($81.68bn), whichever is lower. The law is awaiting UAE presidential approval to come into effect.
UAE Budgets: 2002‐10 (DhBn)
2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | |
Expenditure | 43.6 | 42.2 | 34.9 | 28.425 | 27.88 | 22.70 | 23.88 | 23.16 | 22.66 |
Revenue | 43.6 | 42.2 | 34.9 | 28.425 | 27.88 | 22.70 | 21.07 | 20.99 | 20.43 |
Deficit | - | - | - | - | - | - | 2.16 | 2.21 | 2.17 |
Copyright MEES 2009.
