Dubai's ruler approves next year's government budget with a lower $498m deficit
Dubai's ruler on Sunday approved a 2012 government budget with a smaller deficit than in 2011, an official statement said, as spending on development projects in the debt-laden Gulf Arab emirate decreased.
The budget shortfall of the UAE member was set at AED1.83bn ($498.2m) or 0.6 percent of its 2010 gross domestic product, down from a AED3.78bn gap or 1.3 percent of GDP planned for 2011.
Spending is projected at AED32.26bn, the statement said, slightly down from AED33.68bn planned for 2011. Revenues have been set at AED30.43bn, up from AED29.91bn projected for 2011.
The statement did not say whether Dubai planned to issue government bonds to finance the gap. The emirate's government launched a $500m 10-year bond in June.
Dubai carrier Emirates raised $1bn in a five-year issue the same month, yielding 5.125 percent, which attracted orders of over $5bn.
The Gulf trade and business hub, whose budget stands at around 14 percent of that of neighbouring Abu Dhabi, does not release regular updates on its fiscal performance.
Dubai relies on various fees, taxes and customs duties for around 85 percent of its budget revenues since it lacks oil wealth of Abu Dhabi.
Fiscal policy is a key tool for UAE policymakers to steer the oil-reliant economy, as the central bank's flexibility is limited by the OPEC member's currency peg to the US dollar.
Most of UAE government expenditure is undertaken by the individual emirates with Dubai accounting for around 11 percent of the total.
Dubai, which narrowly averted a bond default in 2009, could use money raised by its sovereign wealth fund to help repay $3.8bn in bonds owed by state-linked firms which mature next year, a source said.
The Gulf Arab emirate has clawed its way back from the depths of its debt crisis, helped by an economic revival in trade and tourism and its safe-haven status amid the regional social revolts, but still faces the challenge of big debt repayments.
Seasons Greetings, AB and fellow commentators.
Just wondered whether this figure encompasses all the debt maturity repayments due in 2012 or is that dealt with in another section. Thought that figure was somewhere between $4 and 6 billion according to analysts
More fees and taxes on small business to make up the deficit.
@ Business Man, you always have the option to pack and leave to other countries where you will have to pay your taxes through your nose and be left with practically nothing to survive or expand your business, it is just an option in case you have forgotten it to be grateful.
oh dear Ziad.
Only the 3rd comment on the article and you had to raise the "if you dont like it leave" standard response.
Was hoping for something a bit more substantial but it appears we have to leave if we want to have a real debate huh.