Dubai adopted its 2018 budget foreseeing expenditure of $15.5 billion (AED56.6bn), a 19.5 percent increase over last year, as it prepares to host Expo 2020.
But the 2018 budget of Dubai also forecasts a deficit of $1.7 billion, a government statement said.
"Dubai's commitment to Expo excellence, and to UAE's leading status on the international scene has led to approving a budget with an AED 6.2 billion deficit," Abdulrahman Saleh Al Saleh, who heads Dubai's government finance department, said.
He said the high expenditure was the result of a "46.5 percent rise in the infrastructural spending over the fiscal year 2017, and including over AED 5 billion dedicated to Expo projects".
"The Expo presents challenges that require us to focus on availing construction expenses needed for the mega infrastructure projects," he said.
According to the statement, the investment value of the Expo is estimated at 25 billion dirhams ($6.8bn).
Dubai, a city state which has established itself as a regional business hub and tourism destination, has the Gulf's most diversified economy, and is not dependent on oil revenues.
The economy of Dubai, where the population of 2.5 million people is comprised mainly of foreigners, focuses on finance, property, tourism and leisure.
The government said the 2018 budget forecasts a rise in infrastructure spending "which makes up 21 percent of the total government expenditure".
Dubai also expects a 12 percent increase in public revenues next year compared to 2017, with oil income representing six percent of the total, the statement added.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.