Mohammed approves Dubai's 2013 budget

Dh34.1 bn expenditure budget sees public revenues rising 7.8%

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Monday approved Dubai's fiscal budget for the year 2013.

The budget's main features include

  • Expansive budget of Dh34.1billion expenditure;
  • Increase in public revenues by 7.8 per cent on 2012;
  • Operating surplus of Dh204 million;
  • Lowers budget deficit to below 0.5 per cent of GDP;
  • 6 per cent of public spending allocated to debt servicing;
  • 1,600 job opportunities to be created for Emiratis;
  • 26% of 2013 budget earmarked for spending on health, education, housing and social development.

The 2013 Budget directly applies directives as set by His Highness to focus on a prudent fiscal policy that provides the stimuli necessary to economic growth in the emirate, raise the efficiency of government agencies to provide the best services, health and social care for the citizens and residents.

Abdul Rahman Saleh Al Saleh, Director General of the Department of Finance (DoF), stated that the approved budget reflects the directives of Sheikh Hamdan bin Mohammed bin Rashid, Crown Prince of Dubai and Chairman of the Executive Council, on the implementation of approved financial plans to support all the strategic sectors of the Government of Dubai.

The gap in the budget of the fiscal year 2013 has been reduced by 18 per cent from 2012, where public revenues have been set at Dh32.62 billion, while public expenditures were assigned at Dh34.12 billion.

Al Saleh points to the possibility of balancing the 2013 budget but emphasises the government's preference to expand its expenditures in a bid to support the emirate's economy by increasing public spending for the fiscal year 2013 by 6 per centover the 2012 budget, without sacrificing the strategic objectives of the government of reducing the deficit and achieving the balance in the general budget.

Distribution of Government Revenues in 2013

The revenue figures highlight the success of the Emirate of Dubai in increasing its public revenues for the fiscal year 2013 by 7.2 per ent compared to those of the previous year.

Government fees, representing 62 per cent of total government revenues, are set to increase by 9.8 per cent compared to 2012. The rise in fees revenue is due to real economic growth and reflects the expected growth rates in the emirate. It also reflects the development and diversity of government services which allows the implemented policy of not raising any government fees in the emirate, as adopted post the global economic crisis.

Tax revenues representing 23 per cent of total government income which represent customs and foreign bank taxes show an increase of 15 per cent in 2013 over 2012. This increase indicates the development in the performance of customs. Moreover, the development and increase of foreign bank taxes is a further indicator of the evolving positive economic situation in the emirate.

Net oil revenues witnessed an increase of 11.8 per ent in the fiscal year 2013 owing to higher oil prices.

Allocations to budget from government investment returns were reduced to allow for increased reinvestment in the Emirate's economic growth.

Distribution of Government Expenditure

In government expenditures, salaries and wages are set at 39 per ent, affirming the government's support of human resources and the creation of 1,600 job opportunities for Emiratis.

General and administrative expenses represent 24 per ent, reflecting the government's commitment to further developing its institutions and its support to the provision of better government services to citizens and residents.

Subsidies and grants represent 11 per cent of total government expenditure and show a 67 per cent increase over 2012. These include housing subsidies, sports, non-profit organisations, charitable organisations, media and sports activities.

16 per cent of government spending is allocated for the completion of infrastructure and developmental projects in the emirate as the government remains committed to its announced infrastructure projects. Although this shows a 4.8 per cent decrease from 2012, it is due to the completion of several large projects. Going forward, the emirate intends to launch new projects to support Expo 2020.

The 2013 fiscal budget clearly demonstrates Dubai Government's commitment to its obligations and earmarks 6 per ent of the total spending to debt.

Expenditure by Sector

The distribution of expenditures by key sectors emphasises the government's commitment to the individual, taking it cue from Sheikh Mohammed’s belief that “People are the real wealth of the nation'.

This is reflected in 26 per cent of government spending being allocated to social development in the areas of healthcare, education, housing and community development.

Furthermore, the Dubai government supports social services through the establishment of Public Benefits Fund to support families, and the establishment of a fund, as directed by Sheikh Mohammed, to support small and medium-sized projects for the youth, with a view to promoting entrepreneurship among them.

In preparing the 2013 fiscal budget, it was essential not to lose sight of the security, justice and safety sector. 23 per cent was allocated for this vital sector which supports the wellbeing of all citizens to live in security and safety contributing to higher rates of economic growth and a heightened sense of citizenship.

Despite the completion of many of the larger projects, Dubai fiscal budget allocates 35 per cent for infrastructure, transportation and the economic sectors, as Dubai continues to grow and its government continues to support new projects.

Arif Abdul Rahman Al Ahli, Executive Director, -Budgeting and Planning at the DoF, confirmed that while preparing the budget for fiscal year 2013, the Government of Dubai has adhered to the fiscal policy rules by using recurring revenues to finance recurring expenses and achieving an operational surplus estimated at Dh204 million.

Moreover, the government has indicated that it is committed to not using oil revenues to fund infrastructure projects.

In the 2013 fiscal budget, Dubai government is able to reduce the budget deficit to record levels keeping the deficit ratio at less than 0.5 per cent of the GDP.

The Department of Finance also pointed out that it continues to work side by side with other government entities to prepare a plan for the implementation of the budget and provide the required funds according to the priorities of the government.

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