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UAE approves draft 2011 budget of 41 bln drhms
The 41 billion dirhams figure is less than planned spending for 2010.
November 8, 2010 12:03 by Reuters
The United Arab Emirates cabinet has approved a draft budget of 41 billion dirhams ($11.2 billion) for fiscal year 2011, the state news agency said on Sunday, a figure that is less than projected spending for 2010.
“The draft plan put the three year spending for the budget cycle 2011-2013 at 122 billion, while the spending for year 2011 is estimated at 41 billion,” WAM said.
“According to the cabinet decision, the draft budget for fiscal year 2011 will be the first zero-based budget based on a medium-term plan for the next three years.”
The 41 billion dirhams figure is less than planned spending for 2010. The UAE finance ministry said in August it planned to increase federal spending in the next three years, adding there would be no deficit despite the expected rise.
A senior finance ministry official, Saeed Rashid al-Yateem, Executive Director of Budget and Revenue at the UAE finance ministry, told Reuters last week the UAE would keep to its 2010 federal spending target of 43.6 billion dirhams ($11.9 billion) and would end the year with a balanced budget as planned.
The world’s third-largest oil exporter raised federal expenditure by 3.4 percent for 2010, but its largest emirates have cut their own spending, scaling back infrastructure projects, lowering subsidies and imposing austerity measures.
The global credit crunch halted an oil- and real estate-led boom in the UAE, sending the Gulf state into its first economic downturn since 1993. Debt problems in property-focused Dubai have hampered recovery in 2010.
Fiscal policy is a key tool for UAE policymakers to steer the oil-reliant economy, as the central bank’s flexibility is limited by the OPEC member’s currency peg to the dollar.
The federal budget accounts for around 15 percent of total UAE government expenditure, most of which is undertaken by the individual emirates. It is financed with contributions from the seven emirates and income from fees and investments, but does not include oil receipts.
Federal spending is equivalent to less than a quarter of expenditure for the Abu Dhabi emirate, which controls 10 percent of the world’s oil reserves, but is slightly higher than annual spending in Dubai.
“The 2011 budget focuses on social development with 46 percent of the total allocations covering public and higher education sectors, university development, health, salaries, pensions and social benefits, as well as the grants through the Sheikh Zayed Housing Programme and the Marriage Fund,” WAM said.
(Reporting by Andrew Hammond; Editing by Erica Billingham)