Analysts welcome Dubai's new budget

Dubai's budget sends out a strong signal that even a non-oil regional economy can, with economic diversification, record healthy revenue flows, economists said yesterday.

It is encouraging that Dubai is coming out with a budget, and this will boost the private sector, businessmen added. They were reacting to news that General Shaikh Mohammad Bin Rashid Al Maktoum, Dubai Crown Prince and UAE Defence Minister, has approved the consolidated budget for the emirate of Dubai for fiscal year 2005.

Total expenditure was projected at Dh52 billion against income of Dh56 billion, leaving a surplus of Dh4 billion, Wam reported.

Chaired by Shaikh Mohammad, the Dubai Executive Council discussed the current year's budget at its recent meeting, it added.

"For the first time Dubai is coming out with a budget. This is a very important step and will send out the right message to corporates that are coming into Dubai," said Dr Mohammad Al Asoomi, a Dubai-based economist.

"It indicates the financial stability of Dubai, sending out a strong message to oil producing countries to diversify their economies. The transparency also sends out the right message to foreign investors about Dubai's income," he added.

Dubai has no foreign debt so the surplus would probably go to government reserves. It will also give a further push to develop the non-oil sector.

Industry captains said this would prove a real boost for businesses.

"The private sector will have a clear picture as to how much Dubai Government is spending, and in what sectors," said Khalid Bin Kalban, managing director and CEO of Dubai Investments. Transparency on the sectors in which the government plans investments will enable the private sector chalk out its strategy for the future, he added.

"The strong revenue inflow should come as no surprise: despite the low oil income, Dubai has several revenue sources including customs, various state-run companies that are yielding profits, the construction and real estate sector, as also returns on funds invested domestically and abroad," said Abdullah Sharafi, an econ-omist and director of Gerab National Enterprises.