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Abu Dhabi, UAEMonday 22 October 2018

UAE Cabinet approves Dh60bn federal budget for 2019 development

More than half of next year's budget will be allocated for education and community 

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, with his team at a recent brainstorming session. Dubai Media Office
Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, with his team at a recent brainstorming session. Dubai Media Office

The UAE Cabinet has approved the largest federal budget in the country’s history, with more than half allocated for education and social development.

The fiscal year of 2019 will have a balanced budget of Dh60.3 billion, an increase of 17.3 per cent from this year’s Dh51.4bn budget, which also prioritised community development and education.

A budget of Dh180bn for 2019-2021 was also approved during a Cabinet Session chaired by Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, at the Presidential Palace in Abu Dhabi on Sunday.

There was “no excuse” for ministers in failing to implement federal targets in education, health and security, said Sheikh Mohammed.

"The citizen is our top priority and we allocated the bulk of the budget to ensure [the citizen’s] prosperity, health, education and security,” he said.

"We have new responsibilities and a renewed vision, and the people have future aspirations. Ministers and managers have no excuse today not to implement their strategies to achieve the UAE’s Vision 2021.”

The budget meets President Sheikh Khalifa's directives to achieve the targets of Vision 2021.

Social development programmes are the foremost priority and will receive Dh25.5bn, or 42.3 per cent of the 2019 budget, slightly less than the 43.5 per cent share allocated this year.

Education will receive Dh10.25bn, 17 per cent, and the healthcare sector will receive Dh4.40bn, or 7.3 per cent, unchanged from this year.

State news agency Wam reported that the security sector will receive substantial government support but did not specify how much will be allocated to defence.

The budget will support GDP growth in non-oil sectors in 2019, said Monica Malik, a chief economist at Abu Dhabi Commercial Bank.

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“This highlights the proactive stance of the government to supporting economic activity and growth,” said Ms Malik. “We see real non-oil GDP growth accelerating in 2019 with stronger government spending, including on the investment front. We envisage an acceleration in government spending on both the federal and emirate levels.”

“The outlined measures are broad-based, though we believe that higher government spending will provide the fastest and most direct support to real GDP growth in 2019.”

This month, Sheikh Khalifa announced a Dh1.97bn national budget increase. The federal budget is distinct from the budgets of the individual seven emirates.

Bilal Khan, a senior economist for Mena and Pakistan at Standard Chartered, said the federal investment in non-oil growth will probably be supported at an emirate level.

“The announcements are in line with our view that policymakers are likely to use counter-cyclical fiscal policy to support non-oil growth in the UAE over the next couple of years. The increased outlay in the federal budget is likely to be accompanied by a co-ordinated fiscal accommodation at the emirate level, in our view.”

During the session, the cabinet also adopted the Federal Law on Regulation of the National Space Sector to foster investment, research and partnership. It was included in the budget to organise the federal development of the space sector and to encourage private sector investment in the field.

“It was coincidence that the adoption of the larger federal budget coincided with the space sector regulation,” tweeted Sheikh Mohammed after the meeting. “Both will open new horizons to the Emirates, if God wills it.”

The budget’s approval follows a series of new policies to spur economic growth and investment, including changes to the country’s sponsorship system and new regulations that permit companies to operate without a physical office.

Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, announced a three-year Dh50bn stimulus package for Abu Dhabi in June.

The plan, called Ghadan 2021 (Tomorrow 2021), has 50 initiatives to stimulate investment and job creation, including investment in the knowledge sector, the employment and education of Emiratis, and overall quality of life. It will slash red tape for businesses and build confidence in the emirate’s economy.

Sheikh Saif bin Zayed, Deputy Prime Minister and Minister of Interior, and Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs, were among those present at today's meeting.

During the session, the Cabinet ratified an agreement on cultural exchange between the UAE and France, and an air transport agreement between the UAE and Belize, the UAE and the Marshall Islands and air services between the UAE and the Caribbean country of Grenada.

Additionally, it approved agreements to promote and protect UAE investments with Kazakhstan and Costa Rica, and agreed that the Emirates join the 1997 Protocol of the International Convention for the Prevention of Air Pollution caused by ships.

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