UAE's BoP surplus dips to Dh1.78b in '01

The UAE's overall surplus in the balance of payments (BoP) dropped last year to Dh1.78 billion from Dh10.41 billion in 2000 - a fall of almost 83 per cent mainly due to the decline in flows within the net foreign assets of the Central Bank in 2001.

The UAE's surplus in the trade balance as well as current account balance has come down in 2001 due to lower crude oil exports and higher commodity imports, the Central Bank's annual report released yesterday showed preliminary data as showing.

The surplus in the trade balance decreased from Dh54.4 billion in 2000 to Dh38.2 billion in 2001, a drop of 29.9 per cent, a result of the marked decline in value of exports of the hydrocarbon sector on the one hand, and a substantial increase in commodity imports, on the other.

"Despite the overall positive image of economic conditions in the UAE during 2001, preliminary estimates of the balance of payments indicated a marked decline in the surpluses of both the trade balance and the current account balance.

This was mainly due to the negative developments witnessed in the oil market," said the report. The decline in revenues of crude oil exports was due to the decrease in crude oil prices in 2001 and hence prices of gas, condensates and petroleum products.

The average price of crude oil fell from $27.2 a barrel in 2000 to $23.3 a barrel in 2001, down 14.3 per cent.

Consequently, the value of crude oil exports dropped from Dh79.5 billion in 2000 to Dh66.1 billion in 2001, down 16.8 per cent.

The value of gas exports also dropped by 9.2 per cent in 2001 compared to 2000, reaching Dh12.7 billion, and so did the value of exports of petroleum products, which decreased by 8 per cent compared to 2000, reaching Dh6.6 billion.

Meanwhile, the value of total exports (including non-monetary gold and free zone exports) rose from Dh34.3 billion in 2000 to Dh36.2 billion in 2001, a growth of 5.5 per cent. The value of re-exports also rose to Dh49.7 billion in 2001 against Dh48.2 billion in 2000, a 3.3 per cent increase.

The value of total imports (including estimated goods imports of all emirates plus free zone imports and exports of non-monetary gold) rose by 3.5 per cent in 2001 compared to 2000 reaching Dh133.1 billion.

"Owing to the improvement in the dirham's exchange rate against currencies of the country's major trade partners and the moderate increase in prices of these commodities in countries of origin, the value of imports in 2001 reflected an increase in volume compared to 2000."

Within the current account, the balance of investment income achieved by public and private investment institutions dropped in 2001 by half percentage point compared to 2000 touching Dh18.6 billion. The debit balance of tourism, travel and government services rose by 8.3 per cent compared to 2000, reaching Dh8.8 billion.

As a result of the decline in the current account surplus from Dh50.5 billion in 2000 to Dh32.5 billion in 2001 (35.6 per cent), capital flows of the government institutions, private capital flow and net errors and omissions item in capital account dropped by 26.5 per cent in 2001 compared to 2000 touching Dh27.1 billion.

Private short-term capital also recorded an outflow of Dh3.86 billion.