Gross domestic product (GDP) growth was strong in 2004, but more needs to be done to encourage foreign investment and promote the employment of nationals, the IMF says in the conclusion to its latest Article IV consultations with the UAE.

‘The pace of liberalisation gained momentum, in particular in Dubai, and to a lesser extent in the other emirates,’ says the fund. ‘Dubai’s policy of extending foreign ownership of land and properties for real estate developments has resulted in a construction boom and a significant increase in FDI [foreign direct investment] in this sector. Sharjah has also established a number of industrial free zones, while the privatisation of Abu Dhabi’s utilities sector is proceeding as planned.’

However, directors also urged greater policy co-ordination between the emirates. ‘They pointed to the need for standardised accounting systems and an improved flow of data between the levels of government,’ says the report. ‘They considered that the structure of the budget should be further strengthened by containing government employment and basing the civil service rewards system on productivity.’

Directors also urged greater transparency. ‘The statistical database and procedures need to be strengthened to enable effective monitoring of the economy. The compilation of statistics on consolidated government activities needs to be improved and structural weaknesses with respect to data quality, coverage, timeliness and inter-sectoral consistency need to be addressed.’