Abu Dhabi spend at all time high
Rise in both current and development expenditure
Abu Dhabi, buoyed by a surge in oil revenue, boosted public spending to an all time high in 2011 and the increase was in both current and development expenditure, according to the IMF.
The increase was in both current expenditure and development spending, which climbed to its highest level of more than Dhseven billion as the emirate appeared to be pursuing post-crisis fiscal expansionary measures.
Despite a sharp rise in oil income, the emirate’s fiscal balance recorded a deficit albeit less than half the 2010 shortfall.
From around Dh260.2 billion in 2010, actual public expenditure swelled to a record high of around Dh314.7 billion in 2011, the Washington-based International Monetary Fund said in a study on the UAE.
Revenue also surged to Dh280.9 billion from Dh192.1 billion after a sharp rise in hydrocarbon export earnings to Dh261.4 billion from Dh169.2 billion.
The report showed the fiscal balance recorded an actual deficit of around Dh33.8 billion in 2011 compared with Dh68 billion in 2010.
Abu Dhabi, the main oil producer in the UAE, has recorded fiscal gaps over the past three years because of a post-crisis expansionary financial policy intended to cushion the downward pressure of the 2008 global distress on its economy.
The deficit grew to its highest level of Dh116.7 billion in 2009 after a sharp fall in crude prices depressed the emirate’s revenue to Dh147 billion from Dh305 billion in 2008. Despite the fall, spending soared to Dh263 billion from Dh187 billion.
The deficit during 2009-2011 was in contrast with large surpluses recorded in the previous four years, with the surplus hitting a record Dh118.4 billion in 2008.
On the revenue side, the IMF report estimated Abu Dhabi’s investment income, mostly from overseas assets, dipped to around Dh12.2 billion in 2011 from Dh15.7 billion in 2010. The income stood at about Dh19.7 billion in 2009 and was as high as Dh28.4 billion in 2008 and a peak of Dh39.5 billion in 2007.
The report gave no reason for the decline but the foreign assets of Abu Dhabi and other Gulf oil producers were severely hit by the 2008 global crisis.
The report showed development spending climbed to its second highest level of Dh27.3 billion in 2011 after hitting a record high of Dh27.6 billion in 2009. The 2011 level was higher than the 2010 spending of Dh23.7 billion.
A breakdown showed housing received the lion’s share of development allocations, standing at around Dh7.2 billion, the highest ever.
Allocations were estimated at Dhfive billion for transport and communications, around Dhthree billion for electricity and water and Dh2.2 billion for health.