UAE's capital ready to spend

UAE’s capital ready to spend

The emirate of some 2 million people, which accounts for around 78 percent of overall fiscal spending in the UAE and is home to one of the world's largest sovereign wealth funds, does not publish its yearly budget plans and outcomes.

January 14, 2013 2:16 by Reuters

Abu Dhabi plans to spend 330 billion dirhams ($90 billion) on development projects over the next five years, the emirate’s Executive Council said in a statement.

“The allocations … are in line with the Abu Dhabi government policy to diversify its economic resources and reduce dependence on oil and gas industry revenues,” said the statement, published late on Sunday.

The plan includes building more than 12,500 houses as well as schools, roads and other infrastructure, said the government of Abu Dhabi, the largest of the seven United Arab Emirates. It said it was improving the investment environment by offering incentives and better facilities to companies.

It expects in 2013 to create 5,000 new jobs for UAE nationals in the emirate, which accounts for almost all UAE oil production. Some 3 billion dirhams worth of housing loans would be provided under the 2013-2017 plan.

“Social development projects were given priority in the Council’s deliberations due to their direct impact on public life,” the statement said.

“The Council members underlined the necessity to move forward with the social development projects in accordance with the timetables already stated because these projects are closely associated with progress being made … in other sectors.”

The emirate of some 2 million people, which accounts for around 78 percent of overall fiscal spending in the UAE and is home to one of the world’s largest sovereign wealth funds, does not publish its yearly budget plans and outcomes.

Abu Dhabi, traditionally more fiscally conservative than neighbouring trade hub Dubai, postponed a number of development projects when it reviewed its economic strategy last year.

It is now proceeding with many of them, albeit at a slower pace. Last week it awarded a $653 million contract to build a branch of France’s Louvre museum, which it hopes will help to develop Abu Dhabi into a top tourist destination.

Government spending in Abu Dhabi, which makes up 65 percent of the UAE’s economic output, jumped 21 percent in 2011 to an estimated 314.7 billion dirhams, a report by the International Monetary Fund based on government figures showed in June 2012. Its revenues shot up 46 percent to 280.9 billion dirhams.

The UAE has not been hit by social unrest seen elsewhere in the Middle East since early 2011, but it has raised public spending along with its fellow oil exporters. It has a cradle-to-grave welfare system and its per capita income of nearly $49,000 in 2012 is one of the highest in the world.

Abu Dhabi’s economy was expected to grow 3.9 percent in 2012, lagging previous forecasts, but should pick up in the next few years helped by further diversification away from oil, the Department of Economic Development said in September.