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29 March 2024

Abu Dhabi capital spending remains high in 2010

Published
By Staff

Abu Dhabi maintained high capital spending in 2010 as part of massive fiscal expansion measures taken by the oil-rich emirate to mitigate the effects of the 2008 global fiscal distress and slackening bank lending.

Official data showed capital expenditure was as high as 38.3 per cent of total public spending in 2010, slightly lower than the previous year’s 39.2 per cent but much higher than the 35.7 per cent recorded in 2008.

Analysts believe the size of capital spending last year was higher than in 2009 on the grounds total expenditure was boosted by at least 10 per cent, Current spending, comprising salaries and government purchases, accounted for nearly 61.7 per cent of total expenditure in 2010 compared with 60.8 per cent in 2009, the Abu Dhabi Department of Economic Development (DED) said.

The increase last year was mainly in spending on wages, which grew to nearly 10.3 per cent of total spending from 9.8 per cent in 2009.

A breakdown showed allocations for public development projects surged to nearly 12.49 per cent in 2010 fro0m 10.9 per cent in 2009 and around 7.2 per cent in 2008. Capital transfers fall to 24.7 per cent in 2010 from around 27.9 per cent in 2009 and nearly 28.3 per cent in 2008.

DED, releasing its 2010 report this week, gave no figures on the size of expenditure but Abu Dhabi’s budget accounts for nearly two thirds of the UAE’s consolidated financial account (CFA), which covers the federal budget and spending by each emirate.

In 2009, the UAE boosted public spending to its highest ever level of Dh289 billion in 2009 despite a sharp decline in oil revenue.

The expenditure last year was way above the 2008 CFA spending of nearly Dh254 billion although oil prices in 2008 were nearly 58 per cent higher than in 2009, according to the Abu Dhabi-based Arab Monetary Fund (AMF.

The report showed revenue in 2009 plunged to around Dh292.6 billion from a record high of Dh450.3 billion in 2008.

It gave no budget figures for 2010 but analysts believe spending was at least 10 per cent higher than in 2009 because of a surge in the country’s oil income.

Abu Dhabi, which pumps most of the UAE’s oil and gas output, recorded a sharp increase in its oil earnings to nearly Dh278 billion in 2010 from around Dh198 billion in 2009 because of higher prices and output.

DED’s report showed oil provided nearly 82.6 per cent of the emirate’s revenue in 2010 compared with 89.2 per cent in the 2009 budget.

The decline in 2010 was offset by a surge in capital revenue, involving investment income and public department earnings, to 10.1 per cent of total revenue from around 2.7 per cent in 2009.

“The large increase in capital earnings shows the emirate’s policy of economic diversification is making progress,” DED said.