Budget deficit shrinking as emirate tries to balance investment with managing debts
Dubai plans to spend AED34.1bn ($9.28bn) in 2013, a modest increase on last year’s spending levels as it tries to balance the need to restore its finances after the debt crisis of 2009 with investment for growth.
The Dubai Department of Finance (DoF) said in a statement that it projected revnues of AED32.6bn for 2013, leaving the government with a AED1.5bn deficit, 18 per cent smaller than the projected deficit for 2012.
Abdulrahman al-Saleh, director general of DoF, said Dubai remained committed to balancing the budget over the longer term, but added the government also recognised the need to “provide the stimuli necessary to economic growth in the emirate”.
Although Dubai’s economy has recovered since government-owned companies such as Dubai World and Nakheel narrowly avoided default and restructured around $26bn of debt, it still faces a huge challenge managing its debts. There is thought to be about $110bn of debt owned by the government and government related-entities, with almost half of it maturing between 2014-16. Although the emirate’s economy is growing and debt has been successfully restructured, no real progress has been made reducing the debt burden.
Although spending is higher than in 2012, it is still lower than 2010 levels. The government says this is because much of the investment in new infrastructure projects has been done, and the latest spending increase is a result of a plan to create 1,600 new jobs for nationals. In the next 12 months the state plans to spend 16 per cent of the budget on completing development projects, a 4.8 per cent decrease of 2012 reflecting “the completion of several large projects”, according to the DoF.
“Going forward the emirate intends to launch new projects to support Expo 2020,” it added, pointing towards investment associated with its bid to host the World Expo in seven years.
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