Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, has approved the emirate's budget for 2024 to 2026 that allocates Dh246.6 billion ($67.14 billion) of expenditure.
Sheikh Mohammed also approved Law No 20 of 2023 for the general budget for the fiscal year 2024.
The emirate has earmarked Dh79.1 billion for spending next year. The move reflects Dubai's fast economic recovery and boosts its ambitions to stimulate the macroeconomy and support the objectives of the Dubai Strategic Plan 2030 development project, as well as the Dubai Economic Agenda D33, the Dubai Media Office said in a statement on Monday.
The emirate expects to achieve public revenue of Dh90.6 billion next year, of which Dh85.1 billion has been allocated to the budget and Dh5.5 billion to the general reserve.
The financial plan for the next three years aims to boost entrepreneurship, attract more foreign investment, promote social welfare, support fields like space research, digitisation and artificial intelligence, and consolidate the emirate's position as a “land of opportunity and innovation”, the statement said.
The new budget will play an “instrumental role in achieving our goals to double the city’s GDP [gross domestic product] and propel it into the ranks of the world's top three urban economies over the next decade”, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, said.
“At the same time, the budget reflects our commitment to harmoniously balance the highest growth ambitions with economic stability, underpinned by prudent financial policies,” he added.
“The financial sustainability, competitiveness and transparency embedded in this budget will make Dubai even more appealing to investors and businesses from across the world seeking new opportunities.”
The emirate, the commercial and trading centre of the Middle East, has allocated 34 per cent of total government expenditure of next year's budget to social development.
This includes sectors such as health, education, scientific research, housing, care for needy families and women and children, reading, translation and programming initiatives, development of youth and sports, care for senior citizens and retirees, and care for people of determination.
The Dubai government has also allocated 19 per cent of total expenditure to the security, justice and safety sector.
Spending on infrastructure, including roads, tunnels, bridges, transport, sewage stations, parks, renewable energy sources and waste treatment facilities accounted for 42 per cent of total spending.
Placing emphasis on supporting the public services sector, government excellence, creativity, innovation and scientific research, the emirate has allocated 5 per cent of total government spending to develop performance and foster a culture of excellence, innovation and creativity.
Abdulrahman Al Saleh, director general of Dubai Government’s Department of Finance, said the government is committed to adopting disciplined financial policies.
“This has led to the establishment of a general reserve from annual revenues that is set to reach around Dh20.6 billion as planned for the three years 2024-2026 … DOF expects to achieve an operating surplus of up to 3.3 per cent of Dubai’s GDP, during the 2024-2026 financial plan, in order to establish the foundations of the emirate’s financial sustainability,” he added.
Grants and government support expenditure will account for 23 per cent of next year's total budget expenditure, while general and administrative expenditure also makes up 24 per cent.
The government has allocated 8 per cent of total expenditure to construction. This sends a “strong signal to the private sector about Dubai’s determination to continue developing its infrastructure and delivering more strategic development projects”, Dubai Media Office statement said.
Dubai is also keen to hedge against any situation that may result from global crises by allocating a special reserve of 8 per cent of the total expected expenditure in the budget.
The emirate has also maintained a debt service ratio that does not exceed 7 per cent of its total expenditures, as part of its disciplined financial policy. Salaries and wages constitute 26 per cent of total government spending.
Business activity in Dubai's non-oil private sector economy remained robust in September as sales growth hit the highest in more than four years amid improving demand.
The emirate's seasonally adjusted S&P Global purchasing managers' index reading rose to 56.1 in September, marking its strongest performance in three months, up from 55.0 in August.
Dubai’s economy expanded an annual 3.2 per cent in the first half of 2023 to reach Dh223.8 billion, driven by 3.6 per cent growth in the second quarter of the year, according to government data.
The emirate's economic performance extends the momentum of growth achieved in 2022, when the emirate expanded by 4.4 per cent. It is forecast to grow by 3.5 per cent in 2023, according to Emirates NBD.
The emirate's transport and storage sector outperformed all other industries, expanding 10.5 per cent in the first six months of the year.
The sector, which includes land, sea and air transport and logistics, contributed 42.8 per cent to overall growth and injected Dh31.4 billion into the economy.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Ziina users can donate to relief efforts in Beirut
Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”
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Favourite author - Paulo Coelho
Favourite holiday destination - Cuba
New York Times or Jordan Times? NYT is a school and JT was my practice field
Role model - My Grandfather
Dream interviewee - Che Guevara
