Mohammed bin Rashid approves 2012 Dubai budget

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, on Sunday approved Dubai's budget for the year 2012.

The 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, the completion of the main infrastructure projects, and chart government expenditure in order to consolidate financial sustainability.

The Department of Finance said that the 2012 public budget is based on a set of core principles, namely continuing efforts to raise the efficiency of government spending through increasing productivity and improving economic and social returns, according to a press release distributed on Sunday by the Dubai Government Media Office.

The budget also focused on diversifying the public revenue sources, increasing their returns, developing clear rules for transparency and fiscal discipline whereby all government departments will continue to implement the highest international quality standards, especially in the services sector.

According to the Department of Finance, the gap in 2012 public budget between the public revenues of Dh30.431 billion and public expenditures of Dh32.258 billion is estimated at around Dh1.827 billion. This constitutes 0.6 per cent of estimated GDP of the emirate, which is in line with international financial guidelines that state that the gap should not exceed three per cent of the GDP. This is further confirmation that the government is continuing to follow a rational expansionary fiscal policy as directed by the Supreme Committee of Fiscal Policy in the Emirate.

Furthermore, a 53 per cent drop in the deficit to Dh1.8 billion from the fiscal year 2011 forecasts shows the emirate is serious in dealing with the public budget deficit while maintaining the growth and support averages for social, economic sectors and public services.

In the 2012 budget for the Government of Dubai, the infrastructure, transportation and economic development sectors make up 41 per cent of total public expenditure. This includes a number of vital sectors including roads, transport, civil aviation, airports and tourism.

Twenty nine per cent of total public expenditure is allocated to the social development sector including areas of health care, education, housing and culture.

The budget allocated 7 per cent of for public services and government excellence sector, containing several key bodies including the Department of Finance, the Financial Audit Department, the Land Department, the Customs Department, and others. Around 22 per cent of public expenditure was allocated for security, safety and justice sector.

The government investment expenditure is set to reach Dh5.9 billion, representing 18 per cent of total public expenditure in order to complete infrastructure and developmental projects in the emirate, that in accordance with the plans laid out to effectively contribute to raising economic growth rates and stimulating domestic and foreign investments.

Abdul Rahman Saleh Al Saleh, Director General of the Department of Finance (DoF) in Dubai, indicated that all government establishments succeeded in ensuring the possibility of achieving a current surplus of Dh1 billion. This comes as a direct result of efforts to rationalise government expenditure and to improve effectiveness, but also as a result of the increased awareness among government departments to improve efficient management of public money.

He said public budget of Dubai Government in the fiscal year 2012 reflects the directives of His Highness the Ruler of Dubai in continuing the development of infrastructure and macroeconomic support in Dubai, while all the time taking into account ways to ensure social welfare to achieve sustainable growth goals. These include the provision of 2m400 job opportunities as well as supporting the social, economic and public service sector.

Al Saleh further confirmed that Dubai government budget was formulated within the framework of the Supreme Committee of Fiscal Policy's recommendations under the chairmanship of Sheikh Ahmed Bin Saeed Al Maktoum. Those directives focus on activating an expansionary fiscal policy in managing the macro economy, and enhancing liquidity to stimulate aggregate demand. These directives have emphasised the emirate's seriousness in dealing with its borrowing specifically debt that was issued to support the general budget and that was used in developing the infrastructure in the past, through servicing such debt from operational income.

Al Saleh added that Dubai is gradually and in a deliberate plan pursuing a set of policies that promote financial sustainability, especially that most infrastructure development expenditures has been completed. These represent a major pillar and a core catalyst for economic growth which will take Dubai public budget to the surplus stage in the future upon completion of such projects.

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