Abu Dhabi, Dubai slash fiscal gap in 2010

A surge in oil export earnings allied with spending cuts depressed Abu Dhabi’s fiscal deficit by more than half in 2010 while Dubai slashed the shortfall to just a third of its 2009 level, according to the IMF
 
Abu Dhabi’s total revenue swelled to around Dh188.4 billion in 2010 from Dh143.9 billion in 2009 after oil export earnings soared to nearly Dh169.2 billion from Dh121.7 billion because of higher prices and output by the emirate.
 
Investment income, which is usually not included in the announced budget, dipped to nearly Dh13.1 billion from Dh16.5 billion, the Washington-based International Monetary Fund said in a study.
 
Expenditure was cut from around Dh261.4 billion to Dh245.5 billion although it remained at one of its highest levels.
 
The report showed the deficit was slashed to Dh57.07 billion last year from around Dh117.4 billion in 2009, the emirate’s largest fiscal shortfall.
 
The balance recorded its highest surplus of nearly Dh113 billion in 2008 when oil prices climbed to a record high annual average of nearly $95 a barrel.
 
The IMF did not say how the deficit was covered in the previous two years but Abu Dhabi had normally resorted to withdrawal from its massive foreign assets, controlled mostly by its investment arm, Abu Dhabi Investment Authority.
 
A breakdown showed the cut in spending last year was mostly in development expenditure as well as loans and equity, which plunged to nearly Dh43.6 billion in 2010 from around Dh77.4 billion in 2009.
 
Abu Dhabi does not publish budget figures but bankers said the emirate’s spending accounts for nearly two thirds of the UAE’s total expenditure. Abu Dhabi is also the main contributor to the country’s federal budget as it pumps more than 90 per cent of its total oil production.
 
The report showed Dubai, which has been locked in restructuring programmes at key government related entities, also managed to trim its budget deficit in 2010 by sharply cutting spending, mainly loans and equity.
 
Revenue rose slightly to around Dh41.9 billion in 2010 from Dh40.5 billion in 2009 but expenditure was slashed to Dh61.9 billion from Dh95.5 billion.
 
While current spending grew to around Dh34.5 billion from Dh30.9 billion, loans and equity dived to only Dh15.7 billion from Dh49.9 billion.
 
As a result, the fiscal shortfall tumbled to Dh19.9 billion from a record high Dh55 billion in 2009. The report showed Dubai’s budget deficit had remained manageable through the previous years as it stood at around Dh8.3 billion in 2008 and only Dh1.3 billion in 2007. The budget recorded a surplus of Dh2.5 billion in 2006, Dh4.47 billion in 2005 and around Dh1.43 billion in 2004.
A revenue breakdown showed oil fetched around Dh6.46 billion in 2010 compared with Dh4.7 billion in 2009 while tax revenue edged up to around Dh7.3 billion from Dh7.1 billion. Customs also rose slightly to about Dh5.9 billion from Dh5.7 billion while income tax grew to Dh1.38 billion from Dh1.34 billion.
 
The report showed transfers from Abu Dhabi stood at Dh11 billion last year compared with nearly Dh12.2 billion in 2009.
Development expenditure was also affected by the spending cut as it fell to around Dh11 billion from Dh13.5 billion in the same period.
 
Comments

Comments