Our region is witnessing a number of geopolitical developments, alongside ongoing challenges in the global economy, requiring governments to adopt long-term strategic fiscal policies that strike a balance between stability and growth. This period reflects a delicate balance between continued economic activity and heightened uncertainty, requiring institutional readiness and effective tools for risk management.
The UAE has demonstrated through its various experiences its ability to respond effectively to regional and international developments, supported by a resilient economic system and balanced fiscal policies that have strengthened stability and supported sustainable growth and prosperity.
In this context, the UAE presents an advanced and leading model of fiscal readiness, with the Ministry of Finance playing a strategic role that extends beyond the traditional management of resources to include striking a balance between supporting growth and ensuring sustainability. This is reflected in the development of legislative and digital frameworks and in improving spending efficiency, thereby strengthening confidence and financial stability.
This approach is becoming increasingly important in light of the latest estimates by the International Monetary Fund, which point to a relative slowdown in global growth amid continued uncertainty. Global growth is projected to reach about 3 per cent this year, before improving to 3.4 per cent next year, remaining below historical averages. Global inflation is also projected to rise to about 4.7 per cent this year, driven by continued geopolitical uncertainty and higher energy and transport prices, before gradually declining to about 3.9 per cent next year. These indicators reflect a global economic environment characterised by cautious balance, reinforcing the need for more consistent and disciplined fiscal policies capable of adapting to different scenarios.
In contrast to this cautious global outlook and prevailing uncertainty, the latest IMF estimates show that the national economy will maintain its resilience, with growth projected at about 3.1 per cent this year despite regional and global conditions, before accelerating significantly to about 5.3 per cent next year.
These estimates highlight the UAE as a model of sustainable growth and prosperity, while also reflecting the success of national strategies in economic diversification and enhancing the attractiveness of foreign investment. In terms of price stability, the country is expected to remain among the most stable economies globally, with inflation projected to remain at 2.5 per cent this year and decline further to 2.1 per cent next year. This underscores the effectiveness of the country’s monetary and fiscal policies in protecting consumers’ purchasing power, supporting private sector competitiveness and reinforcing overall economic stability.
The fiscal approach is centred on diversifying the productive base and reducing dependence on traditional resources. Long-term policies have contributed to raising the contribution of non-oil sectors to about 79 per cent of gross domestic product, reflecting a transformation towards building more diversified foundations that support revenue stability.
In this context, the country’s financial strength is further demonstrated by the sovereign wealth funds’ assets, which amount to about $2.49 trillion, placing the UAE third globally. This limits the exposure of public finances to market fluctuations and provides a more resilient foundation for financial planning and the continuity of development, ultimately achieving a delicate balance between stimulating economic growth and preserving fiscal sustainability in the face of changing conditions.
Fiscal discipline further demonstrates the effectiveness of the approach adopted by the UAE. This year’s federal budget, amounting to Dh92.4 billion ($25.1 billion), reflects a clear commitment to achieving balance for the second consecutive year, demonstrating the country’s institutional capacity to manage resources with a high degree of efficiency.
This approach is supported by positive fiscal performance, reflected in a budget surplus equal to 5.6 per cent of GDP over the past five years. This strengthens confidence in the sustainability of fiscal policies and demonstrates the UAE’s ability to balance development spending requirements with the preservation of financial stability.
The clarity of policies, efficient resource management, and consistency and stability of the fiscal approach are reflected in markets’ assessment of creditworthiness and fiscal sustainability, which has in turn supported investor confidence. This was demonstrated by the strong demand for the government’s debt instruments, with coverage reaching 4.4 times and bids totalling $1.32 billion at the government treasury bond auction held in March, reflecting broad recognition of the strength of the fiscal framework.
This confidence was further reinforced by the significant success of the launch of the UAE’s first retail government treasury sukuk programme, which culminated in its official listing on the Dubai Financial Market. The programme attracted subscription orders totalling Dh445 million, against an initial issuance size of Dh50 million, achieving coverage of about nine times. This exceptional demand reflects growing investor confidence in the government’s strong financial position. It also demonstrates the success of the UAE’s efforts to broaden the investor base for sovereign debt instruments, deepen and enhance the resilience of capital markets, support sustainable economic growth and strengthen the competitiveness of the national financial system.
This confidence is further reinforced by S&P Global Ratings maintaining the UAE’s credit rating at “AA/A-1+” with a stable outlook in March, and Moody’s Ratings affirming the country’s rating at “Aa2” with a stable outlook the same month. These represent renewed global endorsements of the UAE’s position as a trusted destination and reflect the impact of fiscal policies in strengthening confidence in global markets.
This is complemented by the UAE’s position as a globally competitive investment destination. Foreign direct investment inflows reached about $45.6 billion in 2024, strengthening the national economy’s ability to attract capital. This is supported by a clear vision for digital transformation through the adoption of advanced digital infrastructure and innovative financial solutions, including the expanded use of advanced technologies across government and financial services.
These efforts enhance business efficiency and reduce transaction costs, reflecting the strength of the UAE’s advanced digital infrastructure and its position as one of the world’s most future-ready financial systems.
High liquidity further supports fiscal readiness. According to S&P estimates, net government assets stand at 184 per cent of GDP, while liquid assets are about 210 per cent of GDP, providing a strong capacity to absorb shocks. This is complemented by a robust banking sector with total assets of approximately Dh5.42 trillion.
Building on these foundations, the UAE continues to consolidate a balanced fiscal model based on sustainability and discipline, supported by effective governance and institutional efficiency. This ensures the continuity of development and strengthens the country’s ability to transform challenges into opportunities as part of a long-term strategic vision.
