The UAE Cabinet has approved a Dh248 billion federal budget for the next five years, with a prime focus on education, social development and health, as the country bucks the regional purse-tightening trend.
The budget for next year was set at Dh48.7bn, a slight increase from this year’s Dh48.57bn, which also focused on social development, education and health.
The lion’s share of the 2017 budget, around Dh25.2bn, is dedicated to sectors affecting the lives of UAE citizens.
About 20.5 per cent of the 2017 budget, or Dh10.2bn, has been earmarked to the education sector, 8.6 per cent or Dh4.2bn to the healthcare sector, 8.2 per cent or Dh4bn to public sector wages, 6.6 per cent or Dh3.2bn to social development and 3.3 per cent or Dh1.6bn to housing.
“Utilising the financial resources to achieve the highest degree of prosperity and welfare of the citizens and residents is a priority, underlining education, health and community welfare as key pillars for the development of the society,” said Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.
The Cabinet also set aside Dh3.3bn for federal projects in the 2017 budget. These include: Dh891 million for federal government projects, Dh771m for developing the power and water sector through projects undertaken by the Federal Electricity and Water Authority and Dh1.4bn for the Sheikh Zayed housing programme.
In addition, Dh2bn has been earmarked to support government innovation through the establishment of the Mohammed bin Rashid Innovation fund to help inventors, in line with the targets of Vision 2021.
The federal government of the UAE is maintaining spending over the next five years despite a drop in oil prices, which has eaten away into its biggest source of revenue.
The UAE swung to a deficit of 2.1 per cent of GDP last year as oil prices plunged by more than half their value in 2014.
The country is forecast to post a 3.9 per cent deficit this year, and a 1.9 per cent deficit next year, according to IMF estimates. The IMF is projecting that the UAE’s cumulative fiscal deficit will reach US$18.4bn between this year and 2021 as low oil prices reduce government income.
To help nudge growth higher this year, the IMF has urged the UAE to ease the pace of spending cuts and instead use its ample financial reserves to balance the budget. The fund’s growth forecast for the UAE is 2.3 per cent for this year, down from the 4 per cent growth of last year.
Because of the oil price plunge, the UAE has embarked on a number of cost-reducing initiatives, including a reduction in energy subsidies and other public spending cuts.
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