Fitch estimates that the Abu Dhabi government sold about $27 billion of sovereign wealth fund assets to help it finance its deficit in 2015. Christopher Pike / The National
Fitch estimates that the Abu Dhabi government sold about $27 billion of sovereign wealth fund assets to help it finance its deficit in 2015. Christopher Pike / The National

Abu Dhabi to ease budget spending cuts, says ratings agency Moody’s



Abu Dhabi will slow the pace of spending cuts in its 2016 budget, ratings agency Moody’s expects.

“We expect Abu Dhabi government’s fiscal consolidation effort to slow because of the need to balance the two objectives of supporting growth and curbing the budget deficit,” said Math­ias Angonin, a Dubai-based sovereign analyst at Moody’s. “We [expect] that in 2016 there will be a lower decrease in spending that the 20 per cent achieved in 2015.”

The emirate cut public spending by about 20 per cent in 2015 after the hit to oil prices led Abu Dhabi to run a fiscal deficit of 13.2 per cent of GDP that year, according to estimates from Fitch. Moody’s expects that the deficit will narrow to 9 per cent of GDP this year.

Ministry of Finance figures show that the UAE government, nationally and at the emirate level, cut public spending by 27 per cent in the year up to September 2015, the most recent period for which data is avail­able. Abu Dhabi does not release details of its annual spending.

The government “cut back a bit on public investment in 2015, [but] we hope they won’t do that in the future,” Zeine Zeidane, IMF mission chief to the UAE, told The National last week, when he called on the UAE to “continue to rationalise [its] spending”.

The UAE continues to rely on oil for two-thirds of government revenues, according to IMF data. The collapse in oil prices that began in June 2015 has led the government to spend more than it earns from the sale of oil for the past two years. The IMF expects the UAE to continue to run budget deficits until at least 2020.

Fitch estimates that the Abu Dhabi government sold about $27 billion of sovereign wealth fund assets to help it finance its deficit in 2015. It can finance its deficit by drawing down on the assets of the Abu Dhabi Investment Authority, the sovereign wealth fund that manages between $475bn and $773bn in assets, according to different estimates.

“Abu Dhabi is probably one of the best placed economies in the Gulf to cope with low oil prices,” said Jason Tuvey, an emerging markets economist at Capital Economics. “They’ve got enormous savings in their sovereign wealth funds and debt levels are low, so they can afford to prolong the adjustment for an extended period of time.” Abu Dhabi sovereign wealth funds hold assets under management equivalent to between three and four times the annual economic output of the emirate.

“They cut public spending by an awful lot last year – but, especially in the Gulf, there’s always low-hanging fruit to cut,” he said.

“The economy is still very dependent on public spending, so it is in for a period of weaker growth over the coming years.”

The IMF expects the UAE will grow by 2.3 per cent this year, its slowest growth rate since 2011. Most of that growth will come from Dubai, where the economy is set to expand by 3.3 per cent this year.

Ali Majed Al Mansouri, chairman of the Abu Dhabi Department of Economic Development, said that the emirate’s 2016 budget would be “stronger and greater” than its 2015 budget, Aletihad, The National’s Arabic-language sister news­paper, reported.

abouyamourn@thenational.ae

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Difference between fractional ownership and timeshare

Although similar in its appearance, the concept of a fractional title deed is unlike that of a timeshare, which usually involves multiple investors buying “time” in a property whereby the owner has the right to occupation for a specified period of time in any year, as opposed to the actual real estate, said John Peacock, Head of Indirect Tax and Conveyancing, BSA Ahmad Bin Hezeem & Associates, a law firm.

The more serious side of specialty coffee

While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.

The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.

Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”

One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.

Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms. 

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2. Adam Yates (GBR) Ineos Grenadiers - 0:00:35

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4. Chris Harper (AUS) Jumbo-Visma - 0:01:42

5. Neilson Powless (USA) EF Education-Nippo - 0:01:45

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8pm: Handicap (PA) Dh 70,000 (D) 1,000m
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If you go

Flights

Emirates flies from Dubai to Phnom Penh with a stop in Yangon from Dh3,075, and Etihad flies from Abu Dhabi to Phnom Penh with its partner Bangkok Airlines from Dh2,763. These trips take about nine hours each and both include taxes. From there, a road transfer takes at least four hours; airlines including KC Airlines (www.kcairlines.com) offer quick connecting flights from Phnom Penh to Sihanoukville from about $100 (Dh367) return including taxes. Air Asia, Malindo Air and Malaysian Airlines fly direct from Kuala Lumpur to Sihanoukville from $54 each way. Next year, direct flights are due to launch between Bangkok and Sihanoukville, which will cut the journey time by a third.

The stay

Rooms at Alila Villas Koh Russey (www.alilahotels.com/ kohrussey) cost from $385 per night including taxes.

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Current number of staff: 47
 
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Second Test

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