Abu Dhabi: The Government on Monday announced a zero-deficit budget for the sixth consecutive year with Abu Dhabi and Dubai expected to contribute 39 per cent and 3 per cent respectively to the Dh43.6 billion appropriation.
The federal budget, which calls for a 3.4 per cent (Dh1.4 billion) increase in spending, was approved by the Cabinet. It now awaits the endorsement of President His Highness Shaikh Khalifa Bin Zayed Al Nahyan and Federal National Council.
Of the amount budgeted, healthcare, education and social affairs will receive Dh17.8 billion in funding, or 41 per cent of the budget. Government and infrastructure projects will receive Dh7.6 billion.
The budget reflects the Government's determination to push ahead with spending amid the credit crunch.
"I think this budget gives a clear picture of the stabilisation of the financial situation of the country," said Mohammad Al Asoomi, a Dubai-based economist.
"It's very significant that in the face of the global financial crisis the Government is able to retain and increase previous spending levels."
Ministry of Finance officials present at the budget announcement declined to comment on the projected price of oil used as a basis for the contribution of emirates such as Abu Dhabi, which owns 90 per cent of the country's reserves.
"There is an agreement between the Government and the emirates of Dubai and Abu Dhabi that each emirate would contribute its share to the federal budget on a monthly basis," said Younus Al Khouri, Director General, Ministry of Finance.
"In all GCC countries, not just the UAE, governments use a very conservative estimate for oil prices to avoid falling into deficit," said Al Asoomi. "We can safely assume the Government here took that approach this year."
Earlier this month, Oman's Ministry of National Economy said it would base its 2010 budget on a projected oil price average of $50 per barrel, $5 higher than the projection it made in 2008 for this year's budget.
Expected projections
In Kuwait, Finance Minister Mustafa Al Shamali said his country will likely maintain its 2009 projected average of $35 per barrel through next year.
Eckart Woertz, programme manager of economics at the Dubai-based Gulf Research Centre, said projected spending falls in line with his expectations. "With oil at $80 per barrel, it shouldn't be a problem," said Woertz. "But it would be helpful for the Government to share its projections."
The budget of the UAE — the second biggest Arab economy in the Gulf after Saudi Arabia — excludes income and expenditures of the individual emirates.
In figures
Dh9.8 billion for education
Dh7.6 billion for government and infrastructure projects
Dh17.2 billion for government affairs
Dh1.4 billion increase in spending for 2010
Dh42.2 billion budgetary allocation for 2009
Dh990 billion UAE GDP