Dubai has announced a 5 per cent cut in its budget for 2011 compared to 2010 and a narrowing deficit.

The budget for 2011 projects revenues of AED29.9bn ($8.1bn), up by 1.7 per cent from last year, while spending has fallen to AED33.7bn, from AED35.4bn in 2010.

The expenditure estimates keeps Dubai within the deficit limits outlined by the Supreme Fiscal Committee, of no more than 3 per cent of gross domestic product.

The 2011 budget allocated 23 per cent, AED7.5bn, to developing and completing pre-approved infrastructure projects. A further 43 per cent of the spending planned will be on the economic sector, which includes roads, transport, airports civil aviation and tourism.

A further 24 per cent is allocated to social development, which includes health and education spending.

Economists expect Dubai to continue with a cautionary approach to spending, while it tries to deal with debts built up by government owned companies.