UAE goes ahead with balanced budget

08 January 2015

In early January, Dubai released details of its spending plans for 2015. With only 4 per cent of government revenues coming from oil

In October last year, the UAE announced plans for a balanced budget, with federal spending increasing by 6.3 per cent in 2015.

The draft budget of AED49.1bn ($13.4bn) is an increase of AED2.9bn from the 2014 federal spending plan.

The vice-president and prime minister of the UAE and ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum, said the budget will go towards health, education and social services, as well as developing government services for UAE citizens.

According to the draft budget, 49 per cent of the total has been allocated for “service projects, social development and social benefits”, while 41 per cent is allocated for “government”.

The government allocated 3.7 per cent, 3.2 per cent and 2.1 per cent respectively to infrastructure, financial assets and federal expenditures.

The federal budget represents about 14 per cent of overall fiscal spending in the country, with the remainder made up of the individual budgets of the seven emirates.

In early January, Dubai released details of its spending plans for 2015. With only 4 per cent of government revenues coming from oil, the emirate’s budget is not heavily dependent on oil prices.

Keen to continue developing, the government plans to spend AED5.3bn ($1.5bn) on infrastructure projects during 2015.

According to the government’s budget for 2015, infrastructure schemes will receive 13 per cent of public spending. It is also planning to maintain the size of its investment in infrastructure over the next five years.

The planned spending is not sufficient to directly fund multiple large-scale schemes, such as the development of Al-Maktoum International airport, new power plants, new metro lines, and the proposed double-decking of Sheikh Zayed Road, which means Dubai will have to continue exploring alternative funding options if these schemes are to move ahead.

For 2015, the bulk of spending is expected to be for ongoing projects developed by agencies such as the Roads & Transport Authority (RTA), Dubai Airports and Dubai Electricity & Water Authority (Dewa).

The infrastructure spending plans were revealed as the emirate approved a budget of AED41bn for 2015, up 9 per cent on the budget for 2014. The government says the spending plan will create 2,530 job opportunities, and will continue to stimulate economic growth and enhance the social services sector.

The budget is planned to have an operating surplus of AED3.6bn, which will be made possible by an 11 per cent increase in public revenues for 2015.

Revenue from government services generated 74 per cent of total government income, which grew by 22 per cent when compared with 2014.

Tax revenues are planned to rise by 12 per cent in 2015 to account for 21 per cent of total government revenues. This includes customs duties and taxes of foreign banks.

The largest portion of spending will go to wages and salaries, which will account for 37 per cent of total government spending.

General and administrative expenses, capital expenditures, and grants and subsidies will account for 44 per cent of total government spending in 2015.

The budget also allocates 6 per cent of spending for servicing loans.

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