Dubai budget reaffirms fiscal soundness amid constraints

Dubai: The Dubai Government on Saturday formally announced its budget for 2009 with a 42 per cent jump in government spending to Dh37.7 billion against Dh33.5 billion in revenues that could result in a Dh4.2 billion deficit, or 11.14 per cent of the budget, reaffirming the fiscal soundness of the nation's economy and the emirate of Dubai amid challenges and global constraints.

As much as Dh17.05 billion, or 45 per cent of the budget, has been earmarked for infrastructure, public transport - the Roads and Transport Authority (RTA), Dubai Metro, Dubai Municipality projects, and the Dubai Ports Authority.

"His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai yesterday issued, in his capacity as Ruler of Dubai, Decree No. 1 for 2009, for announcing the annual budget for the emirate of Dubai," said a Dubai Department of Finance statement.

"The budget has been formulated in line with the commitment of the Government of Dubai to pursue a progressive fiscal programme aimed at supporting all sectors of the economy facing challenges in the wake of global financial constraints."

Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee, President of the Dubai Civil Aviation Authority and Chairman and Chief Executive of Emirates airline and Group, announced that expected total revenues for 2009 are estimated to be Dh138 billion, a four per cent increase over 2008.

Total Government spending for 2009 is estimated to be Dh135 billion, an 11 per cent increase over 2008. The budget includes allocations for all sectors wholly controlled by the Government of Dubai, in addition to public services.

"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 Ahmad said in a statement.

"We are confident that the strategy adopted under the new budget will prove to be highly successful while providing an essential economic stimulus that will enable businesses to weather the short-term challenges to performance and capitalise on the opportunities that will open up once the global economic recovery begins."

The budget, for the first time, separates Dubai Government's public sector income and expenditure from that of its commercial entities, amalgamated under the Investment Corporation of Dubai and Dubai World.

Expected revenues from the public sector for 2009 are estimated to be Dh33.5 billion, a 26 per cent increase over the Dh26.5 billion reported last year. Government spending for 2009 is expected to reach Dh37.7 billion, a 42 per cent increase over the Dh26.5 billion reported last year.

This expansion will be used to support all sectors of the economy with a special emphasis on the social, infrastructure, and transportation sectors.

Nasser Bin Hassan Al Shaikh, director-general of Dubai Department of Finance, said the Government is in the process of reorganising the government departments to streamline the operation and management of the public sector and its economy as it prepares for a credit rating during the later half of the year.

"We are currently reorganising our house. All Dubai Government investments are being brought under the Investment Corporation of Dubai and Dubai World as we move forward," he told the media while announcing the budget.

"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."

The Government fiscal deficit for 2009 is expected to be Dh4.2 billion.

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 Dh301 billion gross domestic products (GDP) of the emirate.

"Operational budget surplus for 2009 is 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," the statement said.

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 represents eight per cent of the total expected expenditure," it said.

Projected investment in infrastructure has been increased by 33 per cent to Dh12 billion from Dh9 billion in 2008. This represents 32 per cent of the total Government expenditure.

About 14 per cent of government spending, or Dh5.31 billion will be paid towards the economic and services sector which encompasses development, land, tourism, emergency aid, civil aviation and the oil sector.

Al Shaikh concluded: "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."