FNC opposes cuts of 5% to federal spending

Minister says social benefits are safe as Council calls for spending to stimulate the economy, rather than austerity measures.

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ABU DHABI // FNC members broadly opposed yesterday a proposal to slash their budget by five per cent, part of wider cuts to federal spending that members say will harm citizens and drive skilled workers to neighbouring countries.

They argued the Government should be spending money to stimulate the economy instead of relying on austerity measures, and questioned the constitutionality of the proposed cuts.

One member urged the Government to cut ministerial salaries and travel expenses instead of essential services in education and health.

"The one who will be harmed by the five per cent is the regular citizen," said Abdul Raheem al Shaheen, a representative from Ras al Khaimah.

"Will the salaries of the ministers be affected? Will their per diem costs be affected? Will the benefits that the top officials in the country receive be affected?"

The impassioned pleas were made after a letter announcing the cuts signed by Obaid Humaid al Tayer, the minister of state for financial affairs, was read out in the chamber.

The budgets of ministries and federal bodies are to be cut by five per cent. The FNC's budget is set to fall to Dh126.27 million for 2011, 2012 and 2013, down from Dh132m in 2010.

A vast majority of the council were against the cuts.

"Today we are in a financial crisis, like all the countries in the world the Government should spend and not hold back," Dr al Shaheen said.

He said the strategy of cutting federal spending violated basic economic principles.

"This is the wrong message that the government is sending in this regard." He added that it was not clear where the cuts would occur.

"When you cut five per cent from the Ministry of Social Affairs, it means 10,000 people will now not get benefits," Dr al Shaheen said.

Ahmed al Khateri, a member from RAK, said: "The federal government is facing a lot of challenges." There was a "dangerous bleeding" in federal jobs, he said, particularly in health and education, with many employees leaving their jobs due to low salaries.

Mohammed al Zaabi, a member from Sharjah,e warned that many expatriates with technical expertise, such as doctors and nurses, were leaving their federal government jobs and looking for work in neighbouring countries.

Yousef al Nuaimi, a member from RAK, doubted that FNC proposals to raise the salaries of doctors and teachers would be acted upon.

He said that the cuts would be harmful to the federal government as emirates would respond by directing money towards local projects.

"The carpet is being pulled slowly from under federal authorities," he said.

The FNC is expected to debate next year's federal budget before the end of the year.

Dr Anwar Gargash, Minister of State for FNC affairs, said the Government would not cut social benefits, but he acknowledged that federal finances were suffering.

"The federal government is not the only government suffering from the effects of the financial crisis," Dr Gargash said.

The UAE was one of the countries that dealt seriously with the crisis early on, for instance by pumping money into the financial system, he said.

The Government had to balance its development costs with financial revenues, he said.