Education gets priority in 2010 plan for UAE

Abu Dhabi: Federal government investments and services will account for 58 per cent of revenues in the 2010 federal budget approved on Monday by the Cabinet, a senior Finance Ministry official said.

Despite announcing a record budget of Dh43.6 billion for next year and projecting a zero deficit, ministry officials declined to comment on the specific contributions from investments and services revenues and the budget announcement was followed by calls for more transparency from economists and Federal National Council (FNC) members.

"Transparency levels in the UAE fall behind those in other Gulf countries," said Eckart Woertz, programme manager of economics at the Dubai-based Gulf Research Centre. "You obviously want to know where the money is coming from, whether the government expects volatility in those sources and how it plans to make up for any shortfalls."

The budget, which allocates 41 per cent of revenues to education, health care and social affairs such as financial assistance for low-income families, marks the sixth consecutive year of deficit-free planning.

Surpluses accumulated at the local levels are retained by their respective governments. "The federal budget is just one part of overall spending," said Woertz. "You also have revenues raised by the local governments."

Oil price projections

Speaking to reporters after the budget announcement, Finance Ministry Director-General Younus Al Khouri said the ministry has an agreement with the emirates of Dubai and Abu Dhabi to secure their monthly contributions to the federal budget. Oil price projections are made at the local level, he said.

Earlier this month, Oman's Ministry of National Economy said it would base its 2010 budget on a projected oil price average of $50 per barrel, $5 higher than the projection it made in 2008 for this year's budget.

In Kuwait, Finance Minister Mustafa Al Shamali said his country will likely maintain its 2009 projected average of $35 per barrel through next year. As a result of its conservative projection, Kuwaiti banks are estimating the government would realise a $20 billion (Dh74 billion) surplus by the end of the year.

Oil prices have recently surpassed $80 per barrel. They have remained above $50 per barrel since May and above $60 per barrel since mid-July, a factor that pushed the International Monetary Fund to upgrade its economic growth projections for all exporters, including the UAE, earlier this month.

"As long as there is no deficit, I have no problem with [the budget]," said Sultan Al Moazen, FNC member from Fujairah. "But there is an urgent need to increase spending on health care, education and housing. Health services are nearly non-existent in emirates past Sharjah."

Al Moazen said part of the problem lies in the misallocation of resources by the ministries. It is possible, he says, that the ministries of health and education asked for more money from the federal budget, but "we will never know because of the lack of transparency".

Officials at the Ministry of Health were not available for comment.

The Ministry of Health will receive Dh2.8 billion, or 6.4 per cent of the total. The ministries of Education and Higher education will receive Dh9.9 billion, or 22.7 per cent of the outlay. The Zayed Housing Programme will receive Dh1.1 billion.

"The budget is a fiscal indication of a government's philosophy and political direction in a given year," said Abdul Rahim Al Shahin, FNC member from Ras Al Khaimah. "It shows how much the government will be spending on education, health care and housing."

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