Dubai's Dh46.1b budget to boost growth, jobs

Experts say higher allocations to infrastructure, social spending bode well for economy.

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Dubai on Sunday approved a zero-deficit budget of Dh46.1 billion for 2016 with a major chunk of expenditure on social development and infrastructure.

His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, approved the budget with 12 per cent more state spending compared to 2015's Dh41.177 billion.

Thirty-six per cent of the government spending would go towards wages and salaries, as the government plans to add 3,000 new jobs for its citizens next year. The government spending on infrastructure, transport and economic development would rise by slightly more than 12 per cent, accounting for 36 per cent of total spending.

Analysts, financial experts and the corporate circle have welcomed the government of Dubai's second consecutive budget with a zero deficit, which features a 12 per cent increase in state spending and an operating surplus of Dh3.4 billion for 2016.

Abdulrahman Saleh Al Saleh, director-general of the Government of Dubai's Department of Finance, said: "The break-even point between government revenues and expenditures has come as a result of strict financial policies of the Dubai Supreme Fiscal Committee... which focused on increasing spending for the development of the sectors of the economy, infrastructure, communications, security, justice and safety, government services and excellence and social development."

Analysts said this a landmark budget, which proves how the emirate's diversification from oil into trading, services and hospitality has helped the government.

 

  

"The 2016 Dubai budget blends fiscal prudence with support for investment incentives. It is significant that oil is only six per cent of Dubai government revenues," Matein Khalid, a global equities strategist and fund manager, told Khaleej Times. 

Shailesh Dash, chief executive officer of Al Masah Capital Management, said this is a very forward-looking budget. "The continuous investment into infrastructure and social sectors shows the continuity in the strategy that will make Dubai unique in the region. This will help Dubai in the long run to continue its leadership role in the region." 

Saad Maniar, managing partner of Crowe Horwath at its DIFC Branch, said that an increase in budget spent is good news, as it will contribute towards stimulating and sustaining growth. "Healthcare, tourism, logistics and education are the key to growth of Dubai and I would anticipate government spend to be more in these areas in the future," he said. 

The emirate has the most diversified economy in the region and does not depend on oil, which is projected to account for only six per cent of revenues in 2016 compared to four per cent this year. 

Revenue from government services, which represents 74 per cent of total government revenue, increased by 12 per cent compared to 2015. The increase reflects the projected growth rates for the principality, and the evolution and diversity of government services. 

Tax revenues represent 19 per cent of total government revenues, which include customs and taxes of foreign banks, according to the development outcome of the customs by the emirate's economic growth.

 

 

Niranjan Gidwani, deputy chief executive officer of Eros Group, said: "It is indeed a truly forward-thinking budget, in line with the dynamic vision of Shaikh Mohammed, a vision that has made Dubai one of the most prominent global brands in the world today. The focus is on all the important areas - infrastructure development, justice, safety, security and job creation. 

Somer Massey, chief executive officer of Kotak Mahindra Financial Services, said: "It is commendable that the government continues to invest in infrastructure and social development despite the challenging global economic environment. This augurs well for Dubai, which has successfully diversified income streams and which focuses on building a state for the future, a preferred destination for workers and tourists alike."

 

Expenditure 

The distribution of government expenditure figures shows that wages and salaries represented 36 per cent of total government spending, underscoring the government's desire to support recruitment and human resource support in the emirate, as well as provision for 3,000 new jobs for citizens by working to balance fiscal year 2016. 

General and administrative expenses, capital expenditures and grants and subsidies accounted for 45 per cent of total government spending in 2016. 

The government is keen to keep the development, advancement and support of government institutions to provide better government services for citizens and residents on its territory, as well as government support for housing bodies and institutions, sports and public welfare associations, charities and the media to achieve the well being of citizens and residents and raise the rates of happiness community. 

On the other hand, the government continues to support infrastructure projects by allocating 14 per cent of government spending to infrastructure, and the hard work of building excellent infrastructure contributes to making the emirate always attractive to investments. Dubai is planning to maintain the size of its investments in infrastructure over the next five years. 

Figures contained in the budget for 2016, as well as the interest of the government of Dubai to continue dealing with loans seriously across routing five per cent of total spending for debt service, are in support of the government's financial sustainability. 

On expenditures on social development in the areas of health, education, housing and community development - 37 per cent of government expenditure - the government has taken to support social services through continued support for public benefits fund to support families with children, and maternal and child welfare, disabled persons, youth and sports clubs. 

The budget of 2016 re-stressed the great support to the security, justice and safety sector, being one of the most important authorities for the community. The budget has allocated 21 per cent of government spending to support this vital sector.

 

 

Budget is "Forward thinking": Dubai's business community

Dubai's business community has welcomed the budget announced by the emirate's government for 2016 and called it "forward thinking". Reacting to the announcement made on Sunday after His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, approved the budget, heads of financial companies said it was commendable that the government continues to invest in infrastructure, safety and security.

The 2016 budget is 12 per cent more that the 2015 budget. It has no deficit, provides more than 3,000 job opportunities and continues to stimulate economic growth.

Niranjan Gidwani, deputy chief executive officer, Eros group, said, "It is indeed a truly forward thinking budget, in line with the dynamic vision of the Ruler, a vision which has made Dubai one of the most prominent global brands in the world today. The focus is on all the important areas - infrastructure development, justice, safety, security and job creation. "May the Ruler, the Government and people of this land continue to be blessed with this forward thinking and commitment to sustainable progress."

Somer Massey, chief executive officer, Kotak Mahindra Financial Services Ltd said, "It is commendable that the government continues to invest in infrastructure and social development despite the challenging global economic environment. This augurs well for Dubai which has successfully diversified income streams and which focuses on building a state for the future, a preferred destination for workers and tourists alike."

Vibhuti Joshi, associate vice-president of a finance company, said, "Looks like a very impressive budget, with unexpected numbers."

C Sunil Roy, Account Director, Publilink said:

"The budget provides strong affirmation on the strength of the economy. There is clear evidence of economic growth which can be attributed to the emphasis on planning, infrastructure development and social growth. The budget provides ample scope for overall development and there is also a strong emphasis on creation of job opportunities which will help to propel the economic growth in the desired direction".

 

credit to Khaleej