UAE first-quarter net operating surplus more than doubles on revenue boost

Higher oil prices supported revenue growth in the first three months of the year, the Ministry of Finance says

The UAE reported a strong revenue increase in the first three months of the year. AFP

The UAE government's net operating surplus more than doubled in the first quarter of this year, as higher oil prices boosted revenue of the Arab world’s second-largest economy.

Operating surplus for the three-month period to the end of March rose to Dh36.4 billion ($9.9bn), up from Dh15.9bn posted in the same period in 2021, according to the latest data released by the Ministry of Finance on Monday.

Public revenue in the first three months of the year rose by 39 per cent on an annual basis to Dh123.8bn, the data showed.

The UAE economy, which rebounded strongly from the Covid-19 pandemic-driven slump in 2021, has carried the growth momentum into this year.

The country’s economic output is set to post its strongest annual expansion since 2011 after it grew by 8.2 per cent in the first three months of this year. This was driven by a sharp increase in oil production, as well as a noticeable improvement in the real non-oil gross domestic product, the UAE Central Bank said in its latest Quarterly Economic Review 2022.

The UAE economy, which expanded by 3.8 per cent in 2021, is expected to grow by 5.4 per cent and 4.2 per cent in 2022 and 2023, respectively, the regulator said in July.

Oil prices, which rose by 67 per cent last year, are currently trading near the $90 to $100 per barrel mark, despite falling from a recent peak of $123 per barrel on demand concerns amid rising fears of a global recession.

Public spending in the UAE at the end of March reached Dh87.4bn, a 19.6 per cent year-on-year increase.

Total spending included Dh28.7bn for employee compensation payments; goods and services usage of Dh30.9bn; as well as Dh14.1bn for social benefits; Dh6.4bn for subsidies; Dh1.7bn for interest; Dh1.6bn for fixed capital expenditure; Dh304 million for grants; and Dh3.8bn in other expenses.

In October last year, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, approved the UAE budget for 2022 with total expenditure of Dh58.93bn.

The largest share of the budget was allocated to the development and social benefits sector at 41.2 per cent. This included 16.3 per cent for education, 6 per cent for social development, 8.4 per cent for health, 8.2 per cent for pensions and 2.6 per cent for other services.

About 3.8 per cent of the budget was allocated to the infrastructure and financial resources sector.

In June, the UAE Federal National Council said it plans to boost the federal budget spending for this year by an additional Dh1.23bn, with revenue estimated to increase by about Dh374.9m.

The country also announced a five-year federal budget last year with a total spend of Dh290bn until 2026.

Sheikh Mohammed said at the time that the UAE was sending a message that the country was primed for further success.