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25 May 2024

UAE Federal government to move to three-year budgets

The child handed over the envelope to Buhaira police station. (Magdy Iskandar))

By Reuters
The United Arab Emirates said in Wednesday it was revamping the way it develops its federal budget, including releasing budgets every three years and adopting a "zero-based budgeting" format.

The first three-year budget would run from 2011 to 2013, and the first draft of the plan would be ready by November this year, the country’s Ministry of Finance said in a statement.

The UAE, a federation of seven emirates including Abu Dhabi and Dubai, currently releases budgets every year and uses an incremental budgeting process.

"We are moving away from incremental budgeting because incremental budgeting presumes a stable environment where current activities persist at roughly the same cost in future years," the ministry said.

"Zero-based budgeting is useful for rapidly growing GDP and (the) need for large-scale infrastructure development," it said.

Last year, the UAE federal government said it raised 2009 state expenditure by 21 per cent to Dh42.2 billion ($11.49 billion) in a balanced budget.

In incremental budgeting, ministry budgeting teams justify only increases over the previous budget, without reference to previous levels of spending.

Under zero-based budgeting, individual departments would have to build each three-year budget from the ground up, including approving all expenditures rather than just increases in expenditures, the ministry said.

"There are clear differences between original budget requests from ministries and ultimately approved budgets. But it will mean a lot more work than incremental budgets," it said.

The final 2011-2013 budget would be developed in the first half of 2010, the Ministry of Finance said.