Two thirds of the Dubai Government's Dh33.7 billion (US$9.17bn) spending this year will go towards improving roads and other crucial infrastructure projects.
The emirate's deficit will shrink under the budget approved yesterday by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.
"Dubai cannot really avoid a deficit this year given the need for completing road transport projects," said Mark McFarland, an emerging markets economist at Emirates NBD in Dubai. "It already has one of the best infrastructures in the developing world and it is positive for the economy by helping people get from A to B."
Government revenues are expected to reach Dh29.9bn this year, with expenditure projected to hit Dh33.7bn, or about 5 per cent less than projected in last year's budget.
The deficit would be "well within" the target of 3 per cent of the emirate's GDP, the Department of Finance said.
About 43 per cent of spending will go towards roads, airports and civil aviation schemes.
Pre-approved project completion will account for Dh7.5bn, or 23 per cent.
Social development, including health and education services, will account for 24 per cent of expenditure, with 22 per cent spent on security and the legal sectors.
Despite the projected deficit, the Government is running a surplus of Dh1.9bn at current spending levels, said Abdulrahman al Saleh, the director general of the Department of Finance.