Shaikh Mohammad chairs UAE Cabinet meeting Image Credit: Twitter

Dubai: Sectors that are directly related with social services received the largest allocation in the 2017 draft budget, which was approved by the UAE Cabinet on Sunday.

The total budget outlay of Dh48.7 billion for 2017 is marginally up from Dh48.55 billion allocated last year. Despite the persistent decline in oil prices the Federal budget outlay has kept pace with the spending plans of previous years.

On an annualised basis the five year allocation of Dh248 billion works out to an average annual spending of Dh49.6 billion is higher by 6.5 per cent compared to Dh46.6 billion of average government spending during the 2014-16 three year budget.

More than half is allocated for social sectors, valued at Dh25.2 billion including general and higher education sector at allocated 20.5 per cent or Dh10.2 billion of the budget outlay.

Health care and protection of society was allocated Dh4.2 billion or 8.6 per cent, of the total allocation while pensions got Dh4 billion or 8.2 per cent. Other welfare focused spending plan include community development allocated Dh3.2 billion and housing Dh1.6 billion.

“We aim to provide all the means and capabilities to meet the requirements of the future Government vision, and make it one of the best governments in the world in various sectors, through the optimal use of resources to enhancing the services provided to citizens and residents,” said His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

The budget also allocates 42 per cent for government affairs sector, valued at Dh20.7 billion, to manage its financial affairs, provide the finest services to citizens, and achieve the vision of leadership to position the UAE in the leadership position in assuring the security and safety of its citizens and residents. This includes special programs that support the nation’s relationships regionally and globally, and the development of the judiciary and providing distinctive judicial services.

In the overall allocation of the budget, federal projects get Dh3.3 billion, of which Dh891 million are allocated for projects of the federal ministries, and Dh771 million for development power and water projects in the country to be implemented by the Federal Authority for Electricity and Water.

While Shaikh Zayed Housing Programme was allocated Dh1.4 billion, Dh13.5 million is set aside for projects of the Ministry of Education. In addition to that, Dh215 million were allocated to establish police and civil defense centers, and headquarters of naturalization and residence, and scientific laboratories.

Innovation got a big push in the budget through a Dh2 billion allocation to supporting government innovation, through the establishment of the Shaikh Mohammad bin Rashid Al Maktoum Fund to Finance Innovation. It will provide financing solutions for innovators and incubation support to turn their ideas into projects that will support the national strategy for innovation and achieving the goals of Vision 2021.

Although the budget does not a give breakdown of revenues in terms of various sources, analysts said, going forward the proposed value added tax (VAT), federal government fees and service charges will contribute to government revenues as the UAE continues its fiscal consolidation efforts.

The country is expected to generate about Dh10 billion to Dh12 billion from VAT in 2018, the first year of implementation.

The International Monetary Fund (IMF) estimates the UAE will post a budget deficit of 3.9 per cent of economic output this year, wider than 2015’s 2.1 per cent. It booked a surplus of 5 per cent in 2014. As part of the fiscal consolidation efforts the government has been gradually introducing subsidy reforms in fuel, power and water pricing.