Emirate’s 2012 budget targets Dh30.43b in revenue as 40% of expenditure to be on salaries
Dubai: Dubai will reduce its budget deficit by 53 per cent to Dh1.82 billion next year, with expenditures expected to reach Dh32.25 billion, the government has announced.
The budget for 2012 has a target to generate Dh30.43 billion in revenues, 60 per cent of which, or Dh18.33 billion, will come from government fees and service charges, while customs and tax revenues will fetch Dh6.6 billion, or 22 per cent. Oil revenues are put at Dh3.5 billion, or 11 per cent, while the rest, seven per cent or Dh2 billion, will be sourced from dividends generated by government investment entities.
Emirates airline, a Dubai government entity, paid Dh1.6 billion to the government as a dividend in April this year. About Dh12.58 billion or 40 per cent of government expenditure has been earmarked for salaries and wages of government employees, while operating expenditure has been estimated at Dh11.30 billion, or 35 per cent.
“This constitutes 0.6 per cent of estimated GDP of the emirate of Dubai, which is in line with international financial guidelines that state the gap should not exceed three per cent of GDP. This is further confirmation that the government is continuing to follow a rational expansionary fiscal policy as directed by the Supreme Committee of Fiscal Policy in the emirate,” a government statement said.
“Furthermore, a 53 per cent drop in the deficit to Dh1.8 billion from the fiscal year 2011 forecasts, shows the emirate is serious in dealing with the public budget deficit while maintaining the growth and support averages for social, economic sectors and public services.”
Abdul Rahman Saleh Al Saleh, Director General of the Department of Finance (DoF), said his government is “gradually” and “in a deliberate plan” pursuing a set of policies that promote financial sustainability, especially now that most infrastructure development expenditures have been completed.
Catalyst for surplus
“These represent a major pillar and a core catalyst for economic growth which will take Dubai’s public budget to the surplus stage in the future upon completion of such projects,” he said.
Infrastructure, transportation and economic development sectors make up 41 per cent of public expenditure. This includes a number of vital sectors including roads, transport, civil aviation, airports and tourism.
Twenty-nine per cent of total public expenditure is allocated to the social development sector including areas of health care, education, housing and culture.
The budget allocates seven per cent of government expenditure to public services and government excellence sectors, which contain several key bodies including the Department of Finance, the Financial Audit Department, the Land Department, the Customs Department, and others. About 22 per cent of public expenditure was allocated to the security, safety and justice sectors.
“This is a conservative budget and reflects a fiscally prudent policy that the government is pursuing,” Giyas Gokkent, chief economist at the National Bank of Abu Dhabi, told Gulf News.
“For Dubai, the government budget was never a problem. It has been the government-related entites that were in trouble,” he said. The government investment expenditure is set to reach Dh5.9 billion — representing 18 per cent of public expenditure — in order to complete infrastructure and developmental projects, laid out in accordance with the plans to effectively contribute to raising economic growth rates and stimulating domestic and foreign investment.
The Department of Fin-ance said the 2012 public budget is based on a set of core principles, namely continuing efforts to raise the efficiency of government spending through increasing productivity and improving economic and social returns.
Abdul Rahman Saleh Al Saleh, director general of the Department of Finance (DoF), said all government establishments succeeded in ensuring the possibility of achieving a current surplus of Dh1 billion. This is a direct result of efforts to rationalise government expenditure and to improve effectiveness, but also as a result of the increased awareness among government departments to improve efficient management of public money.
“Dubai Government’s public budget has taken into account ways to ensure social welfare to achieve sustainable growth goals, includeing the provision of 2,400 job opportunities as well as supporting the social, economic and public service sectors,” he said.
The budget also focuses on diversifying public revenue sources, increasing their returns, and developing clear rules for transparency and fiscal discipline whereby all government departments will continue to implement the highest international quality standards, especially in the services sector.
The budget directly applies directives as set by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to focus on a prudent fiscal policy that provides the stimulus necessary for economic growth in the emirate, complete the main infrastructure projects, and chart government expenditure in order to consolidate financial sustainability.