Monday, December 11, 2017

Dubai unveils largest-ever budget at $15.4bn spend

Dubai unveiled its largest ever public budget of Dh56.6 billion ($15,4 billion) for 2018, featuring a 19.5 per cent year-on-year increase, in line with the Dubai Strategic Plan 2021's targets and future commitments, especially Expo 2020.

The Ruler of Dubai, Vice President and Prime Minister of the UAE Sheikh Mohammed bin Rashid Al Maktoum approved the Government of Dubai’s 2018 General Budget Law No. (21) for the year 2017, according to the new budget classification.

The budget features a rise in infrastructure spending, which makes up 21 per cent of the total government expenditure. This reflects the directives of His Highness the Ruler of Dubai to raise infrastructure efficiency in Dubai in order for the emirate to become the preferred destination for living, tourism, and business across all sectors.

“Over the coming years, Dubai Government actively seeks to improve public budget performance continuously, in order to achieve financial sustainability, fulfil the emirate’s commitments, and realise the strategic objectives of Dubai 2021 Plan. Further, this aims to make the upcoming mega international event – Expo 2020 Dubai – one of the best in the history of Expo exhibitions, in line with the vision of our prudent leadership, aiming to make Dubai always ready to impress the world”, said Abdulrahman Saleh Al Saleh, director general, Dubai Government’s Department of Finance (DOF).

“The Expo presents challenges that require us to focus on availing construction expenses needed for the mega infrastructure projects related to Expo 2020 Dubai. Such projects will only benefit the success of the huge international expo upon launching in three years, but is also expected to serve the emirate for decades to come, especially in light of Dubai’s noticeable urban expansion towards the Expo project area” Al Saleh continued.

“Dubai’s commitment to Expo excellence, and to UAE’s leading status on the international scene has led to approving a budget with a Dh6.2 billion deficit, representing 1.55 per cent of the total GDP in Dubai. This is a result of a 46.5 per cent rise in the infrastructural spending over the fiscal year 2017, and including over Dh5 billion dedicated to Expo projects,” Al Saleh stated.

The 2018 Budget has also shown the importance that the government gives to social services, including healthcare, education, culture and housing, which have contributed to the high rating of the UAE in global competitiveness indices, and its top regional ranking in the happiness index.

On the other hand, the government has managed to achieve financial sustainability by achieving an operating surplus of Dh2.5 billion. This illustrates the breadth of the financial solvency of Dubai, in accordance with the directives of the Dubai Supreme Fiscal Committee. The Public Private Partnership law forms an ideal platform to build modern practices in the management of financial resources efficiently and effectively. Over the coming years, this law will contribute to the implementation of some public projects in partnership with the private sector, which will enhance creativity and innovation, further raise the government's performance levels, enhance government efficiency, and enhance transparency.

Projected government revenues for 2018

Dubai expects estimated public revenues of Dh50.4 billion, with a 12 per cent increase over the fiscal year 2017. Such revenues depend on the approach adopted by Dubai over the past decade that has led to no dependence on oil revenues and greater government revenues. Oil revenues represent 6 per cent of the total expected revenues for the fiscal year 2018, which will enhance the emirate’s financial sustainability.

Non-tax revenues (fees) represent 71 per cent, and tax revenues represent 21 per cent of the total 2018 projected revenues, while revenues from government investments represent 2 per cent.

Projected government expenditures for 2018

The budget’s overall spending saw a 19.5 per cent increase over 2017. The increase was due to the focus on meeting the needs of Expo 2020, whose investment value is estimated at Dh25 billion, as well as the expansion of the Dubai Metro's Route 2020, estimated at around Dh10.6 billion. In this context, DOF has reached the final stage of the Dh5.5 billion financing agreement based on the export credit guarantee system.

In continuation of the Government’s endeavours to provide job opportunities, the public budget offered more than 3,100 jobs, with salaries and wages amounting to 30 per cent of the total government spending in 2018. Moreover, salaries and wages saw a 10 per cent increase over 2017.

General, administrative, grants and support spending recorded 42 per cent of the total government spending, an 11.5 per cent growth over 2017, which reflects the effort to offer the best social, health, and education services to the community, enhance the standard of public services and support innovation and creativity policies.

The Government continues to support infrastructure projects as well as future projects such as AFC Cup and Expo 2020 Dubai. Infrastructure allocation increased by 46.5 per cent over the fiscal year 2017, making up 21 per cent of total government expenditure. This reflects the emirate's keen efforts to implement the Expo 2020 projects according to a well-studied schedule that includes the main expo building, and the supporting service projects, such as roads, bridges, sewage, transport and metro lines, as well as work to prepare the entire area for post-expo events and supporting events tourism.

Additionally, Dubai managed to achieve financial sustainability by achieving an operating surplus of Dh2.5 billion, illustrating Dubai’s ability to finance all operating expenditures and achieve a surplus from the collected operating revenues.

Sectorial distribution of government expenditure

The fiscal year 2018 highlights the priority that the government has placed on human resources, which is seen by His Highness the Ruler of Dubai as "the true wealth of the nation". The expenditure on social development sector fields of health, education, housing, community development, and innovation represents 33 per cent of the total government spending.

Also, the Government allocated 16 per cent of total spending to the security, justice and safety sector, in order to develop it, and enable it to play its vital role.

Moreover, Dubai has been focusing attention on economy, infrastructure, and transport sectors as an integrated sector that it seeks to develop continuously. This played a major role in the UAE occupying a leading global position in several international indices. The Expo 2020 was a major driver of accelerated growth in this sector, which makes up 43 per cent of the 2018 total spending. Allocating over Dh5 billion to Expo 2020 projects alone shows how serious Dubai is in addressing future commitments.

Dubai has also given its support to the Government Excellence, Innovation and Creativity Sector by allocating 8 per cent of total government expenditure to develop performance and embed a culture of excellence, innovation and creativity. – TradeArabia News Service

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