The committee also reviewed the federal government's financial position for the fiscal year 2024. Photo: UAE Presidential Court
The committee also reviewed the federal government's financial position for the fiscal year 2024. Photo: UAE Presidential Court
The committee also reviewed the federal government's financial position for the fiscal year 2024. Photo: UAE Presidential Court
The committee also reviewed the federal government's financial position for the fiscal year 2024. Photo: UAE Presidential Court

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Economy

UAE committee meets to discuss draft general budget for 2025 fiscal year

It also received updates on the approved capital and developmental projects completed in the past months of the 2024 fiscal year

Alkesh Sharma
Alkesh Sharma

June 11, 2024

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The UAE General Budget Committee met on Tuesday to discuss the draft general budget of the Emirates for fiscal year 2025, Dubai Media Office said.

It was the 11th meeting of the General Budget Committee and was held in the presence of Sheikh Mansour bin Zayed, Vice President, Deputy Prime Minister and Chairman of the Presidential Court, and Sheikh Maktoum bin Mohammed, Deputy Prime Minister, Minister of Finance and First Deputy Ruler of Dubai.

At the meeting, the committee discussed the 2025 draft general budget that forms part of the budget plan for the 2022-2026 period, in accordance with the Federal Decree-Law No (26) of 2019 on public finance, amendments, relevant resolutions and recommendations, the DMO said in a statement.

The committee directed that the necessary procedures be done to complete preparing the 2025 draft federal budget for submission to the UAE Cabinet. It also reviewed the federal cash flow for the fiscal year.

The UAE economy expanded by 3.6 per cent last year, driven by strong non-oil sector growth as the country continues to pursue its diversification goals.

Gross domestic product reached Dh1.68 trillion ($457 billion) at constant prices last year, preliminary estimates from the Federal Competitiveness and Statistics Centre showed last month.

The Emirates’ economy has made a strong rebound from the coronavirus pandemic-induced slowdown and the pace of economic momentum has continued to improve on the back of government initiatives and higher oil prices.

In October 2022, the Cabinet approved the country’s federal budget for 2023 to 2026, with a total expenditure of Dh252.3 billion and estimated revenue of Dh255.7 billion.

Last October, the Cabinet approved the budget for fiscal year 2024, with total estimated expenses of more than Dh64.06 billion and projected revenue of nearly Dh65.73 billion.

The committee also reviewed the federal government's financial position for the fiscal year 2024, based on the actual expenditures and revenue from the first half of the year. The indicators reflect the UAE's economic growth across various sectors and activities, DMO said.

It also received updates on the approved capital and developmental projects completed in the past months of the 2024 fiscal year.

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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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Updated: June 11, 2024, 5:59 PM
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