A surge in oil revenue to a record high more than quadrupled the UAE’s current account in 2011 despite a sharp increase in imports, allowing the government to largely boost its investment abroad, according to official data.
Despite the steep rise in the current account, the country’s balance of payments surplus dived by more than 40 per cent last year because of the massive government transfers to overseas assets, the Central Bank figures showed.
From around Dh26.59 billion in 2010, the current account surplus rocketed to nearly Dh112.69 billion in 2011, the figures showed.
The increase was a result of a large rise in the trade surplus to nearly Dh291.6 billion in 2011 from Dh179.87 billion in 2010 after the country’s oil exports shot up to a record high of Dh409.8 billion from Dh274.1 billion in the same period.
Oil exports climbed to an all time high last year after crude prices hit a record high average of nearly $105 a barrel and the UAE, one of the world’s top 10 oil suppliers, pumped at one of its highest output levels of over 2.6 million bpd.
The report showed non-oil exports also surged to Dh227.9 billion from Dh187.3 billion and re-exports to Dh396.4 billion from Dh322.7 billion.
Imports, which indicate business level in the country, soared to nearly Dh742.3 billion in 2011 from Dh604.7 billion in 2010.
“High oil prices and the performance of non-hydrocarbon exports led the surplus of the trade and current account,” the Central Bank said.
But the report showed there was a sharp fall in the overall balance of payments surplus to around Dh16.6 billion last year from Dh26.9 billion in 2010.
It attributed the decline to a steep decline in the financial account due to a large increase in government transfers to overseas assets.
It showed such transfers, included under the item “enterprises of the public sector” shot up to nearly Dh95 billion in 2011 from Dh18.1 billion in 2010.
Foreign direct investment outflow also widened to about Dheight billion from Dh7.4 billion while “errors and omissions” were up to Dh53.7 billion from around Dh18.1 billion in the same period, according to the report.
“The financial account of the balance of payments witnessed a deficit of Dh 35.6 billion in 2009 and a surplus of Dh 18.5 billion in 2010. In 2011, the deficit reached Dh 60.4 billion, due to an outflow of funds by the public sector to the amount of Dh95 billion,” the report said.
“The overall balance of payments remained negative in 2009 to the amount of Dh22.5 billion… it then became positive in 2010 and 2011, to the amount of Dh 26.9 billion and Dh16.6 billion respectively, thereby adding to the net foreign assets of the Central Bank.”