Dh56.6 billion Dubai budget focuses

Dubai on Sunday unveiled a Dh56.6 billion budget for 2018 with a focus on infrastructure projects led by Expo 2020 and social development programmes to create more than 3,100 jobs next year.

The finance document, the largest-ever in Dubai's history with 19.5 per cent year-on-year increase in overall spending, expects 12 per cent rise in public revenues at Dh50.4 billion. Non-tax revenues (fees) represent 71 per cent of the budget and tax revenues contribute 21 per cent, in addition to 6 per cent by oil and 2 per cent by government investments.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, approved Dubai's 2018 General Budget Law No. (21) for the year 2017, according to the new budget classification.

"Over the coming years, the Dubai government actively seeks to improve public budget performance continuously, in order to achieve financial sustainability, fulfil the emirate's commitments, and realise the strategic objectives of Dubai 2021 Plan," said Abdulrahman Saleh Al Saleh, Director-General, Dubai Government's Department of Finance.

Further, he said this aims to make the upcoming mega international event - Expo 2020 Dubai - one of the best in the history of Expo exhibitions.

The budget for the fiscal 2018 comes in line with Dubai Strategic Plan 2021's targets and future commitments, especially Expo 2020. The budget features a rise in infrastructure spending, which makes up 21 per cent of the total government expenditure. This reflects the directives of Sheikh Mohammed to raise infrastructure efficiency in Dubai in order for the emirate to become the preferred destination for living, tourism, and businesses across all sectors.

"The Expo presents challenges that require us to focus on availing construction expenses needed for the mega infrastructure projects related to Expo 2020. Such projects will only benefit the success of the huge international Expo upon launching in three years, but is also expected to serve the emirate for decades to come, especially in light of Dubai's noticeable urban expansion towards the Expo project area," Al Saleh said.

"Dubai's commitment to Expo excellence, and to UAE's leading status on the international scene has led to approving a budget with a Dh6.2 billion deficit, representing 1.55 per cent of the total GDP in Dubai. This is the result of a 46.5 per cent rise in the infrastructural spending over the fiscal year 2017, and including over Dh5 billion dedicated to Expo projects," he added. 

The budget has also shown the importance that the government gives to social services, including healthcare, education, culture and housing, which have contributed to the high rating of the UAE in global competitiveness indices, and its top regional ranking in the happiness index.

The budget's overall spending saw a 19.5 per cent increase over 2017. The increase was due to the focus on meeting the needs of Expo 2020, whose investment value is estimated at Dh25 billion, as well as the expansion of the Dubai Metro's Route 2020, estimated at around Dh10.6 billion. In this context, the Department of Finance has reached the final stage of the Dh5.5 billion financing agreement based on the export credit guarantee system.

In continuation of the government's endeavours to provide job opportunities, the budget offered more than 3,100 jobs, with salaries and wages amounting to 30 per cent of the total government spending in 2018. Moreover, salaries and wages saw a 10 per cent increase over 2017.

General, administrative, grants and support spending recorded 42 per cent of the total spending, a 11.5 per cent growth over 2017, which reflects the effort to offer the best social, health, and education services to the community, enhance the standard of public services and support innovation and creativity policies.

Infrastructure allocation increased by 46.5 per cent over the fiscal year 2017, making up 21 per cent of total government expenditure. This reflects the emirate's keen efforts to implement the Expo 2020 projects according to a well-studied schedule that includes the main expo building, and the supporting service projects, such as roads, bridges, sewage, transport and metro lines, as well as work to prepare the entire area for post-expo events.

Additionally, Dubai managed to achieve financial sustainability by achieving an operating surplus of Dh2.5 billion, illustrating Dubai's ability to finance all operating expenditures and achieve a surplus from the collected operating revenues.

The fiscal year 2018 highlights the priority that the government has placed on human resources, which is seen by Sheikh Mohammed as "the true wealth of the nation". The expenditure on social development fields of health, education, housing, community development and innovation represents 33 per cent of the total spending.

Also, the government allocated 16 per cent of total spending to the security, justice and safety sector.

Dubai has been focusing attention on economy, infrastructure, and transport sectors as an integrated sector that it seeks to develop continuously. This played a major role in the UAE occupying a leading global position in several international indices. Expo 2020 was a major driver of accelerated growth in this sector, which makes up 43 per cent of the 2018 total spending. Allocating over Dh5 billion to Expo 2020 projects alone shows how serious Dubai is in addressing future commitments.

Dubai has also given its support to the Government Excellence, Innovation and Creativity Sector by allocating 8 per cent of total government expenditure to develop performance and embed a culture of excellence, innovation and creativity.

Atik Munshi, senior partner at Crowe Horwath - UAE, said Dubai government has always been focused on growth and the current budget for 2018 reiterates the same. 

"A higher spending by the government particularly on the infra structure projects for Expo 2020 and extension of Metro line will provide a lubricant to the wheels of the Dubai economy and also deliver a thrust to future growth," Munshi told Khaleej Times.

He said private sector is expected to reap benefits from this injection. Additional spending by the government generally results in more jobs and a better economy. "This growth-oriented budget will boost the confidence of resident and overseas investors and creative new opportunities in the market," he said