UAE federal budget shows surplus in first nine months of 2016

The rally in crude prices and a cut in government spending meant that the Federal budget surplus was Dh4.5 billion higher in the first nine months of last year compared to the same period in 2015.

The surplus rose 130 per cent year-on-year during the period to almost Dh8bn compared to Dh3.48bn a year earlier, the Emirates News Agency (Wam) reported, according to its own analysis.

Benchmark Brent crude rose 31 per cent to US$49 a barrel from $37.22 between January and the end of September 2016.

For the whole of last year the budget was set for a negligible deficit, with revenue and expenditure estimated at about Dh48.5bn each.

In the first nine months of 2016, Federal revenue was about 7 per cent higher at Dh37.46bn compared to Dh35bn in the same period of 2015 while spending fell to Dh29.71bn from Dh31.6bn.

Revenue from fees for government services was flat year on year, according to Wam. Fees account for 75 per cent of Federal government revenue.

The UAE Central Bank governor Mubarak Al Mansouri said in November that the government’s moves to reduce expenses and increase revenue from non-oil sources was aiding the overall economic health of the country.

Since the price of oil began its sharp descent in 2014, governments in the region have reduced energy subsidies, cut spending and raised debt in international markets to prevent deficits from spiralling out of control. At the same time they have outlined ambitious plans to transform their oil-reliant economies with measures that include raising value-added taxation and selling off some stakes in major state companies like Saudi Arabia’s Aramco, the world’s largest oil producer.

The IMF, which has hailed the Arabian Gulf’s efforts to plug budget deficits, is projecting that the UAE’s economy grew 2.3 per cent last year and is forecasting it to expand 2.5 per cent this year, broadly in line with the Central Bank’s estimates.

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