The Federal Government's consolidated budget surplus should more than triple to Dh14 billion this year if oil prices are sustained at existing levels.
UAE budget surplus set to triple
The Federal Government's consolidated budget surplus should more than triple to Dh14 billion (US$3.81bn) this year if oil prices are sustained at existing levels, says the Arab Monetary Fund (AMF). Nonetheless, it is still a long way short of the Dh197bn budget surplus the country posted in 2008 when crude prices rose to record highs, a report by the Abu Dhabi-based fund said. It said the surplus should be about 6 per cent of national GDP this year, up from Dh4bn last year.
Economists expect an improvement in the price of oil from last year to help lift the fortunes of the economy this year. "The main reason for the increased surplus is that the oil price saw a big jump this year," said Monica Malik, the chief economist at EFG-Hermes in Dubai. EFG Hermes has forecast the surplus to reach 5.6 per cent of GDP this year. Moody's Investors Service expects the balance to be about 8.4 per cent of national income compared with 0.4 per cent of GDP last year.
Oil prices have more than doubled from their lows of below $34 a barrel in December 2008. Younis al Khouri, the Director General of the Ministry of Finance, said last week the UAE was on course to balance its budget after spending about half of its projected Dh43.6bn annual appropriation in the first six months of the year. The Federal budget accounts for about 15 per cent of total government expenditure in the UAE, with the bulk spent at emirate level.
The health of the UAE's public finances contrasts with the troubles besetting advanced global economies. The US budget deficit this year is expected to be more than $1.3 trillion, slightly less than last year's record $1.4tn shortfall. The UK's budget deficit is expected to reach about 11 per cent of GDP this year. "Preliminary estimates show the UAE's real [GDP] will grow by around 2 per cent this year against a contraction of 1 per cent last year," the AMF said in its economic and market report for the Arab world.
Sultan al Mansouri, the Minister of Economy, said on Sunday he expected growth of 2.25 per cent this year. email@example.com