The UAE Cabinet has approved the general budget of the Emirates for fiscal year 2025, “the largest” in the country's history, with spending estimated at Dh71.5 billion ($19.5 billion).
The Union General Budget Plan for next year also projects revenue at Dh71.5 billion, maintaining “a balanced approach between income and spending”, the media office said on Tuesday.
The fiscal plan for next year was approved at a meeting chaired by Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, and is part of the government’s 2022-2026 financial plan.
“This federal budget represents the largest in the UAE's history, underscoring the robustness of the national economy and the sustainability of resources to support key developmental, economic and social projects,” the statement said.
The UAE, the second-largest economy in the Arab world, has maintained strong momentum since bouncing back from the pandemic-driven slowdown. The country's gross domestic product, which grew by 3.4 per cent in the first quarter of this year, is expected to expand by 4 per cent in 2024 on the back of a boost from its non-oil sector, according to the latest data from the UAE Central Bank.
The non-oil sector is projected to remain strong at 5.2 per cent in 2024 and 5.3 per cent in 2025, driven mainly by efforts to boost foreign investment and continuing structural reforms such as 100 per cent ownership of foreign businesses and tax reforms, the banking regulator said.
Last October, the UAE Cabinet laid out the federal budget of Dh192 billion for the three-year period of 2024 to 2026.
It also approved the fiscal year 2024 budget, with an estimated total revenue of Dh65.73 billion, a 3.3 per cent increase over the previous fiscal year. The budget has also allocated spending of Dh64 billion, 1.6 per cent higher than the funds earmarked for the fiscal year 2023.
The federal budget is a fraction of the total budgetary spending in the UAE as emirates set their own budgets.
Dubai's budget for the fiscal cycle of 2024-2026 estimates total spending at Dh246.6 billion, while expenditure this year alone is estimated to hit Dh79.1 billion, the Dubai government said in October last year. In January, Sharjah approved its general budget for 2024, with total expenditures amounting to approximately Dh40.83 billion, the largest in the emirate's history.
“The federal budget plan tends to aim for a balanced budget, and it accounts for a fairly small proportion of total spending given that the individual emirates have their own budgets, but it can be a useful pointer for government spending intentions,” Daniel Richards, senior economist at Emirates NBD said.
The budgeted spending for next year compared to 2024 signals an 11.5 increase and “for the UAE’s overall budget balance, we forecast a surplus equivalent to 2.4 per cent of GDP next year, following a projected 3 per cent surplus in 2024”, he said.
The 2025 federal budget is allocated across sectors such as social development and pensions, government affairs, infrastructure and economic affairs, and financial investment, the government said on Tuesday.
The social development and pensions sector will receive the biggest allocation of Dh27.86 billion, which accounts for about 39 per cent of the total federal budget layout. More than Dh10 billion of that amount will be earmarked for public and higher education programmes, Dh5.745 billion for healthcare and community prevention services, Dh3.74 billion for social affairs, Dh5.71 billion for pensions, while Dh1.75 billion is allocated for public services spending, the Media Office said.
The government affairs sector will receive Dh25.57 billion, or 35.7 per cent, of the budget. The infrastructure and economic affairs sector has been allocated Dh2.581 billion, while Dh2.86 billion has been designated for the financial investments sector. The government will also allocate Dh12.62 billion for other federal expenditure, it added.
