United Arab Emirates
UAE’s Federal Budget 2013: An Analysis 8 Nov 2012
by Mohammed Abdel Rahman Al-Asoomi

The UAE Cabinet approved the federal budget for fiscal year 2013 recently in line with the Cabinet’s previously adopted strategic plan to put zero-based budgeting for three consecutive years, from 2011 to 2013. This year’s budget demonstrates the Federal decision makers’ determination to achieve optimal utilization of available financial resources, especially after years of diligent efforts to find self-financing sources for the federal budget and reducing dependence on the country’s oil revenues.

Total revenue during the year was estimated at AED44.6 billion with an equal amount for discretionary expenditure. There was no budgeted deficit for the third year in a row and a total expenditure for these three years was at AED133 billion. The strategic orientation and comprehensive vision of the federal government was evident in the fact that AED22.7 billion, or 50.9 percent of public spending, was earmarked for infrastructure and social development, particularly education, healthcare and housing.

At AED9.9 billion, education took a large share of the budget representing 22 percent of the total allocation. The government also paid special attention to health services and its development allocating AED3.4 billion or 7.6 percent to this sector. Infrastructure received a significant share in the federal budget 2013. For example, AED5.2 billion was allocated for the Federal Electricity and Water Authority to develop more projects. Governmental Affairs, including defense, interior, justice, foreign affairs and other federal departments, accounted for 41 percent of the budget with total allocation standing at AED18.3 billion.

The release of this data and timing of the budget announcement by the federal government have sent several positive signals to the business sector. They point to the resilience of the UAE’s financial situation and its ability to deal with the repercussions of the global financial crisis and in overcoming its consequences. These budget allocations increase confidence and help pump new investments in various sectors of the economy, which in turn will lead to increased rates of growth and improvement in the standard of living for citizens as well as residents.

The content herein does not necessarily reflect the opinion of the ECSSR