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Dubai Boosts Public Spending

Nasser bin Hassan Al Shaikh, Director-General of Dubai Department of Finance, announced the budget saying the spending plan was developed with a vision to sustain the exceptional economic growth achieved by the emirate over the past several years.

He said the projected revenues from the public sector in 2009 will be Dh33.5 billion, a 26 per cent increase over 2008’s Dh26.5 billion.

“Compared to spending of Dh26.5 billion in 2008, the expansionary budget expenditure will be used to support all sectors of the economy and have a special emphasis on the social, infrastructure, and transportation sectors,” he said in a media briefing at the Department of Finance.

Total revenues, including those from all sectors and entities controlled by the government, are estimated to reach Dh138 billion, a four-per cent increase over 2008.

The total spending, across all sectors wholly controlled by the government is projected to reach Dh135 billion or an 11-per cent increase over 2008.

Shaikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee, said the strategy would successfully provide a much needed economic stimulus.

He said it would enable businesses weather the short-term challenges to their performance and help them capitalise on the opportunities that will open up once the global economic recovery begins.

“We have abiding faith in the long-term potential of Dubai as a global economic powerhouse under the wise leadership of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice- President and Prime Minister of the UAE and Ruler of Dubai.”

Shaikh Ahmed said the government has several options, including its own reserves and debt capital market, to fund the deficit.

“Accessing the debt capital markets could be an option when market conditions improve.” Last year, the government raised Dh6.5 billion by issuing dirham denominated bonds.

He said the progressive fiscal programme was aimed at supporting all sectors of the economy facing challenges in the wake of global financial constraints.

“Today’s announcement reflects our firm commitment to press ahead with progressive and growth-oriented policies in the wake of short-term constraints on the global economy. We are confident that this budget plan will help consolidate our markets and keep our economy healthy while creating a thriving environment to grow inward investment, ensuring long-term success for the emirate.” added Al Shaikh.

“The budget has been developed in line with the government’s planned development program and the adherence to best practice procedures in managing public finance with the deficit not exceeding 1.3 per cent of the Gross Domestic Product of the emirate.”

Al Shaikh said operational budget surplus for 2009 was expected to reach Dh3 billion, reflecting Dubai’s strong financial position and its ability to absorb future deficit. While operational revenue is expected to reach Dh28.7 billion, operational expenses are expected to amount to Dh25.7 billion.

Public and administrative spending is expected to be Dh22.9 billion, as compared to Dh15.9 billion in 2008, a 44 per cent increase. This represents 61 per cent of the total government expenditure.

Capital expenditure in the new budget has been projected at Dh2.9 billion, compared to Dh1.7 billion last year, an increase of 71 per cent, which demonstrate 8 per cent of the total expected expenditure. Projected investment in infrastructure has been increased by 33 per cent to Dh12 billion from Dh 9 billion in 2008. This represents 32 per cent of the total government expenditure.

“Dubai’s 2009 budget is reflective of the emirate’s continued resilience in the face of increasing strains on the global economy. As one of the region’s leading economies, Dubai remains highly attractive to long-term and stable businesses and investors and continues to maintain its market-leading position within the GCC and regional markets as the preferred business and leisure destination,” he said.

Under the new budget, spending has been allocated as follows:

22 per cent of government spending amounting to Dh8.325 billion to be poured into the social sector, which includes health services, education, social development, Islamic affairs and public housing.

19 per cent of the total budget, Dh7.055 billion will be allocated to the judiciary and security sectors which include the police, immigration and neutralization, courts and public prosecution.

45 per cent of the budget, Dh17.054 billion shall be extended to the Roads and Transport Authority (RTA), Dubai Municipality projects, and the Ports Authority.

14 per cent of government spending, Dh5.311 billion will be paid towards the economic and services sector which encompasses development, land, tourism, emergency aid, civil aviation and the oil sector.

issacjohn@khaleejtimes.com