2009 budget reaffirms Dubai's commitment to sectors facing challenges amid global constraints

The budget has been formulated in line with the commitment of the government of Dubai to pursue a progressive fiscal programme aimed at supporting all sectors of the economy facing challenges in the wake of global financial constraints.

The new budget plan has been developed with a vision to sustain the exceptional economic growth achieved by the emirate over the past few years.

His Highness Sheikh Ahmed Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee announced that expected total revenues for 2009 are estimated to be Dhs138bn, a 4% increase over 2008. The total government spending for 2009 is estimated to be Dhs135bn, an 11% increase over 2008. The budget includes allocations for all sectors wholly controlled by the Government of Dubai, in addition to Public Services.

"We have abiding faith in the long-term potential of Dubai as a global economic powerhouse under the wise leadership of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. We are confident that the strategy we adopted under the new budget will prove to be highly successful while providing an essential economic stimulus that will enable businesses to weather the short-term challenges to performance and capitalise on the opportunities that will open up once the global economic recovery begins," said His Highness.

His Excellency Nasser Bin Hassan Al Shaikh, Director General, Dubai Department of Finance, said "Inline with directives of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the budget for the public and services sector is aimed at conserving the dynamic economic growth Dubai has witnessed in the past few years."

Expected revenues from the public sector for 2009 are estimated to be Dhs33.5bn, a 26% increase over the Dhs26.5bn reported last year. Government spending for 2009 is expected to reach Dhs37.7bn, representing a 42% increase over the Dhs26.5bn reported last year. This expansion in expenditure will be used to support all sectors of the economy and have a special emphasis on the social, infrastructure, and transportation sectors.

"Today's announcement reflects our firm commitment to press ahead with progressive and growth-oriented policies in the wake of short-term constraints on the global economy. We are confident that this budget plan will help consolidate our markets and keep our economy healthy while creating a thriving environment to grow inward investment, ensuring long-term success for the emirate."

Added Alshaikh.

The government fiscal deficit for 2009 is expected to be Dhs4.2bn. The budget has been developed in line with the government's planned development program and the adherence to best practice procedures in managing public finance with the deficit not exceeding 1.3% of the Gross Domestic Product of the emirate.

Operational budget surplus for 2009 is expected to reach Dhs3bn, reflecting Dubai's strong financial position and its ability to absorb future deficit. While operational revenue is expected to reach Dhs28.7bn, operational expenses are expected to amount to Dhs25.7bn.

Public and administrative spending is expected to be Dhs22.9bn, as compared to Dhs15.9bn in 2008, a 44% increase. This represents 61% of the total government expenditure.

Capital expenditure in the new budget has been projected at Dhs2.9bn, compared to Dhs1.7bn last year, an increase of 71%, which demonstrate 8% of the total expected expenditure. Projected investment in infrastructure has been increased by 33% to Dhs12bn from Dhs9bn in 2008. This represents 32% of the total government expenditure.

Dubai's government spending under the new budget has been allocated as follows:

- 22% of government spending amounting to Dhs8.325bn to be poured into the social sector, which includes health services, education, social development, Islamic affairs and public housing.

- 19% of the total budget, i.e. Dhs7.055bn will be allocated to the judiciary and security sectors which include the police, immigration and neutralization, courts and public prosecution.

- 45% of the budget, i.e. Dhs17.054bn shall be extended to the Roads and Transport Authority (RTA), Dubai Municipality projects, and the Ports Authority.

- 14% of government spending, Dhs5.311bn will be paid towards the economic and services sector which encompasses development, land, tourism, emergency aid, civil aviation and the oil sector.

Al Shaikh concluded:

"Dubai's 2009 budget is reflective of the emirate's continued resilience in the face of increasing strains on the global economy. As one of the region's leading economies, Dubai remains highly attractive to long-term and stable businesses and investors and continues to maintain its market-leading position within the GCC and regional markets as the preferred business and leisure destination."