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Thu 7 Jan 2010 05:36 PM

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Dubai ruler clears 2010 budget with deficit of 2% of GDP

Dubai's government revenues projected to reach AED29.4bn ($8bn).

Dubai's ruler approved the Gulf emirate's 2010 budget with a deficit of 2 percent of gross domestic product, deeper than last year and in line with a budget committee's proposal, the government said on Thursday.

"The general budget of the government of Dubai represents a balance between necessities of supporting and stimulating the economy on one side and committing to financial rules and sound principles of managing public funds on the other," Dubai finance department chief Abdulrahman al-Saleh was quoted as saying in a government statement sent to Reuters by a banking source.

Saleh declined to comment on figures when contacted by Reuters.

The 2010 budget gap is projected at 6 billion dirhams ($1.63 billion), up from a 4.2 billion gap envisaged for 2009, the statement said. The government revenues are projected to reach 29.4 billion dirhams, while expenditure stands at 35.4 billion.

The 2010 investment spending is set at 10.7 billion dirhams, which accounts for 30 percent of total expenditures.

Dubai had forecast its first ever deficit for its 2009 budget at 1.3 percent of the emirate's 2007 GDP. The final 2009 data are not available. The emirate is trying to keep its budget gap below 3 percent of GDP.

The emirate, facing a debt pile estimated at $80 billion, has ordered government departments to transfer all revenues to the treasury in a move to better control financial flows.

Analysts have said tax-free Dubai might consider selling its assets to boost revenues as well as raise fees and charges or introduce more paid-for services similar to its road toll system.

Dubai has received a $10 billion dollar bond from Abu Dhabi to repay a $4.1 billion bond for Nakheel , a property arm of its debt-laden Dubai World, and other obligations.

State-owned Dubai World is still to negotiate a standstill deal on $22 billion worth of debt with its creditors. (Reuters)

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