Budget surplus peaks at 30% of GDP on back of oil

The UAE logged a record budget surplus of nearly 30 per cent of GDP last year as strong oil prices boosted its income to its highest level since the Gulf country began pumping crude more than 40 years ago, official figures showed yesterday.

The 2007 balance was far higher than the 2006 budget surplus of around 12 per cent of the gross domestic product and was in sharp contrast with previous years, when the country's fiscal balance reeled under heavy deficits.

The figures by the Arab League's Inter-Arab Investment Guarantee Corporation (IAIGC), citing official UAE estimates, showed the 2007 budget surplus of 30.5 per cent was the highest actual fiscal surplus ever recorded by the UAE.

"The UAE's fiscal balance recorded a surplus of 12.09 per cent of the GDP in 2006 and a record 30.5 per cent of the GDP last year," it said.

The report covered the UAE's consolidated finance account (CFA), which includes the federal budget and individual spending by each emirate.

It did not specify the size of the surplus but it could be as high as Dh219 billion considering that the GDP was officially estimated at Dh729.7bn in 2007.

At that level, the surplus was as high as triple the 2006 surplus of Dh72.4bn and more than five times the 2005 surplus of Dh39.4bn.

In previous years, the CFA suffered from persistent deficits because of high public spending and sharp fluctuations in oil prices.

The actual deficit stood at Dh1.5bn in 2004, nearly Dh14.4bn in 2003 and as high as Dh29.3bn in 2002.

It surged to a high of Dh29.6bn in 2001 due to a sharp rise in expenditure.

The UAE has not yet released official estimates of its 2007 CFA but the country's revenues are expected to have far exceeded Dh300bn, including nearly Dh309bn worth of exports of crude oil, gas and petroleum products.

"Those revenues could have ranged between Dh280bn and Dh300bn after deducting the income of the UAE's foreign oil partners," said an economist at an Abu Dhabi bank.

"With non-oil earnings estimated at over Dh30bn, my expectations are that the UAE's total actual revenues could have largely exceeded Dh300bn," he said.

In 2006, the actual budget revenues peaked at Dh200.7bn, while expenditure also surged to a record Dh128.2bn, creating surplus of more than Dh72bn.

A budget breakdown showed the revenues included mainly oil exports, investment income, tax and public enterprise earnings.

Spending involved development and current expenditure, mainly salaries.