Business | Economy
Revamp of budget plans proposed
A study by Truth Economic Consultants (TEC) has called for a revamp of the country's budgeting system, placing greater emphasis on financial policy.
- By Ahmed A. Elewa, Senior Reporter
- Published: 00:36 May 7, 2008
Abu Dhabi: A study by Truth Economic Consultants (TEC) has called for a revamp of the country's budgeting system, placing greater emphasis on financial policy.
The study, issued yesterday, suggests enacting laws that forces foreign banks and insurance companies to spend 7.5 per cent of their annual net profit in royalties to be allocated for scientific research, social, cultural and human development projects, and recommends a regulation allowing for a 2.5 per cent stake of the annual net profit to be collected annually by the federal government from banks, insurance companies, as well as public and private companies.
"The federal government must set its spending targets first, and then arranging for the necessary funds should follow, while in the case of a deficit, the government is obliged to search for resources," the study stated .
Obstacles
"All the obstacles that stand against the appropriate implementation of the law must be eliminated, and this study recommends focus on drafting a rational financial and economic policy allowing for less dependency on oil revenues," Reda Musallam, director of TEC and author of the study said.
"What this report calls for is collecting proportionate fees for the public services provided relative to the real cost, while in reality these services have mostly been privatised or shifted to the local governments," he added.
The report states that the cost of educating expatriate children stood at Dh7,000 when it was incurred by the Ministry of Education, and have risen to more than Dh15,500 after the Ministry abandoned the programme, a 119 per cent increase. "There is a clear absence of any scientific basis for the country's financial policy," Musallam said.
Government spending from 1995 to 2008 increased from Dh17.9 billion at the outset to Dh34.9 billion in 2008, a growth of only seven per cent. On the revenues side, the nominal annual growth rate stood at eight per cent during the same period from Dh16.90 in 1995 to Dh34.90 in 2008.
"Reading into these figures, I can claim that there is no annual planning, let alone five or ten-year planning," Musallam said.
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