UAE fiscal gap slashed in 2010

The UAE slashed its budget deficit by more than $30 billion in 2010 due to a surge in its revenue and lower public expenditure, according to official data.

A sharp rise in revenue due to stronger crude prices allowed the Arab countries as a group to turn a 2009 deficit into a surplus in 2010 although expenditure swelled by nearly $18 billion, showed the figures by the Abu Dhabi-based Arab Monetary Fund (AMF), an affiliate of the Cairo-based Arab League.

From around $33.9 billion in 2009, the UAE’s fiscal shortfall plunged to nearly $3.8 billion in 2010, said the report, which covered the country’s consolidated financial accounts, involving the federal budget and spending by each emirate.

Despite the decline, the deficit in 2010 was in sharp contrast with previous years when the UAE recorded massive budget surpluses due to higher oil and gas revenue. The surplus hit an all time high of around $51.7 billion in 2008, when oil prices averaged close to $95 a barrel and the UAE pumped at one of its highest oil output levels of nearly 2.6 million barrels per day.

The report showed the sharp fall in the UAE’s fiscal deficit was due to a cut in spending to $89.5 billion in 2010 from $102.7 billion in 2009. Its revenue also increased to $85.7 billion from around $68.3 billion.

Saudi Arabia, the largest Arab economy and the world’s oil superpower, recorded a surplus of $23.3 billion in 2010 compared with a deficit of $23.1 billion in 2009, when oil prices tumbled by more than $30 compared with 2008.

Kuwait’s surplus more than doubled to $22.3 billion from $10.05 while Qatar’s balance dipped to $4.4 billion from $8.8 billion due to higher spending.

Other Arab nations which recorded surpluses were Libya and Iraq while the remaining members suffered from deficits, the largest of which was in Egypt at around $17.7 billion. Morocco and Lebanon also reeled under heavy deficits of around $3.3 billion each while Yemen recorded a shortfall of nearly $2.3 billion for the four year running, according to the report.

It put the combined Arab fiscal surplus at $20.5 billion in 2010 compared with $73.9 billion in 2009. The fall was a result of an increase in expenditure to nearly $691.5 billion in 2010 from around $673.1 billion in 2009 although revenue surged to $712.1 billion from $599.1 billion.

The report showed the UAE, Saudi Arabia and Kuwait accounted for nearly 48 per cent of the total Arab revenue and 44 per cent of the combined spending.

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