Dubai: Dubai's government has ordered its departments to cut spending by 15 per cent to save Dh3.7 billion, with the aim of reducing the emirate's deficit of Dh5.99 billion, the finance department said on Monday.
Dubai is currently preparing a medium-term budget plan for 2011-2013, a finance department spokeswoman said in an e-mailed statement. Government departments are looking to cut costs and expenses without affecting the quality of services, she added.
"This [spending cuts] is not a surprise and it is part of the deleveraging Dubai is going through," said Saud Masud, head of Middle East research at UBS AG.
"It is not a small amount, and we could see similar cuts taking place in the future."
Dubai's announced in November that one of its largest government-owned conglomerates, Dubai World, was in need of a freeze on debt.
Proposals
People familiar with the matter told Zawya Dow Jones last month that one potential offer being considered in the Dubai World debt-restructuring talks was a repayment offer of 60 cents on the dollar, paid back after seven years, but backed by government guarantees. Lenders would receive no interest.
An alternative proposal involves creditors receiving full payment, including 40 per cent of their Dubai World debt in the form of assets in Nakheel — the company's property unit — but with no government guarantee over the same seven-year period, the people familiar with the situation said.
The emirate's government said in January its 2010 budget revenue would total Dh29.4 billion, down 12 per cent from last year's estimate of Dh33.5 billion.
Government expenditure is expected to be 6.1 per cent lower than the figure envisaged for 2009 at Dh35.4 billion.
Dubai had forecast its first-ever deficit for its 2009 budget at 1.3 per cent of its 2007 GDP.
