Dubai to hike spending 11%
Mohammed approves 2014 budget; deficit seen falling by 41% from 2013 level
His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has approved Dubai’s budget for the year 2014, which envisages the deficit falling by 41 per cent from the planned level for 2013.
The budget is based on a set of core principles of continuing to stimulate economic growth, accentuating the social services sector, an operating surplus of Dh2 billion and budget deficit does not exceed 0.26 per cent of the emirate’s gross domestic product.
The budget directly applies directives as set by Shaikh Mohammed 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 and health and social care for all citizens and residents.
Abdul Rahman Saleh Al Saleh, director-general of the Department of Finance in Dubai, indicated that the emirate has succeeded in reducing the gap in the budget of 2014 between public revenues of Dh37,000 million and public expenditures of Dh37,882 million by 41 per cent compared to fiscal year 2013.
Al Saleh clarified the possibility of balancing the 2014 budget but explained the government’s preference to expand its expenditures to support the emirate’s economy and contribute to the higher rates of economic growth — through increased public spending, an increase of 11 per cent from the budget of the fiscal year 2013 — without sacrificing the strategic objectives of the government and work under the directions of Shaikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council, on the implementation of approved financial plans to support all the strategic sectors of the Government of Dubai.
Government revenues 2014
Revenue figures show the success of the Dubai government in increasing public revenues for the fiscal year 2014 by 13 per cent compared to revenue for the financial year 2013.
The expected increase of fees — representing 67 per cent of the total government revenue — by 24 per cent compared with 2013, reflects the expected growth of the emirate and the development and diversity of government services and this is clearly shown through the policy of not raising any government fees in the emirate since the economic crisis. This rise, however, is due to real economic growth that will persist, according to the Department of Finance.
Tax revenue increased by one per cent, representing 21 per cent of total government revenues and includes customs and foreign banks’ taxes. This increase indicates the development of the performance of customs which explains the emirate’s economic growth.
Moreover, the development and increase of bank taxes are good indicators of the evolving economic situation in the emirate.
Net oil revenue accounted for only nine per cent of government revenues of the emirate. Dubai is keen on reducing the budget allocations from government investment returns in support of the increased allocations reinvested contributing to the development of the emirate’s economic growth.
The distribution of government expenditures shows that salaries and wages represent 37 per cent, which confirms the government’s support to human resources and its keenness to provide 1,650 job opportunities for its citizens in 2014, which is a continuation of the localisation policy that the government is adopting where it has adopted 1,600 jobs during the fiscal year 2013 and will continue to do so. Goods and services expenses and capital expenditures, grants and support represent 32 per cent of total government spending and this figure confirms the government’s keenness to maintain the development of government institutions and support to provide better services to its citizens and residents.
The Government of Dubai continues to support infrastructure projects through the provision of 17 per cent of government spending for the completion of infrastructure and developmental projects (development expenditures) in accordance with the plans laid out to effectively contribute to raising economic growth rates and stimulating domestic and foreign investments. Dubai plans to launch new projects in the coming period to support Expo 2020, which will make the emirate even more attractive to investments. Therefore, it begun the preparation for the expansion of infrastructure projects through increased allocations within the budget of fiscal year 2014 to Dh6,350 million, an increase of 13 per cent from 2013 and Dubai plans to maintain the size of its investments in infrastructure through the next five years. The Government of Dubai is serious in dealing with payments and is channelling 11 per cent of the total spending for bonds interest payments.
The security, justice and safety sector supports the feeling of security and safety and contributes to higher rates of economic growth and a sense of citizenship. The budget allocated 21 per cent to support this vital sector.
The infrastructure, transportation and economic sectors are vital sectors to the Government of Dubai and despite the completion of many of the larger projects, the budget allocated 37 per cent for these sectors.
Arif Abdul Rahman Ahli, executive director of Budgeting and Planning, confirmed that the Government of Dubai, when working on the preparation of the fiscal-year 2014 budget, has adhered to the fiscal policy rules by using recurring revenues to finance recurring expenses and achieving a surplus estimated at Dh2 billion contributing to the financial sustainability of the emirate.
Moreover, the government is committed not to use oil revenues to fund infrastructure projects. The government was able to reduce the budget deficit to record levels, where the deficit ratio did not exceed 0.26 per cent of GDP, which shows the government’s seriousness in dealing with the deficit, though it did not exceed the universally compatible ratios.