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Dubai Budget Balances Economic Growth and Welfare

DUBAI — The budget for the year 2010 announced last week shows that the Government of Dubai wants to strike a balance between the need to boost economic growth and to support welfare of the community, the Dubai Chamber of Commerce & Industry said on Thursday.

The government has approved the budget for 2010 in line with its commitment to pursue a progressive fiscal programme aimed at supporting all sectors of the economy facing challenges on the back of the global economic slowdown, Dubai Chamber said in a report.

“The budget represents a balance between the necessity to support and stimulate economic activity on the one hand and commitment to sound financial rules and principles of public funds management on the other,” said Eng Hamad Buamim, Director-General of the Dubai Chamber. Key features of the budget are the continuation to work in the development and completion of the emirate’s infrastructure projects, fostering advancements in public and social services as well as improving overall security measures. “This sound and prudent balance will send a strong message to the business community about the seriousness of the government to push ahead with a rational budget in 2010 and ensure that the economy is on a long-standing stable growth trajectory. The budget is more likely to boost investor confidence on the back of the government’s handling of the adverse situation and in providing a timely stimulus to the overall economy of the Emirate which is looking forward to a better trading year,” Buamim said.

According to the budget, it is estimated that government revenues will reach Dh29.4 billion, whilst government spending will reach Dh35.4 billion. This represents a deficit of Dh6 billion, equivalent to 2 per cent of GDP. In terms of the operating budget, the government has suggested that it will operate a surplus on its current budget (revenue minus current expenditure) which will reach Dh1.9 billion in 2010 (though the government has not provided a breakdown of how it will accomplish 
this surplus).

Achieving this surplus is one of the fruits of increasing efficiency of government spending without unbalancing the overall objectives of fiscal policy. It is only when investment expenditures are added onto current expenditures that the deficit 
is created.

This can be, in fact, positive for the overall economy as these investment expenditures will in-turn stimulate key sectors going forward in the long-term.

It is clear that the sectoral distribution of government spending reflects the balanced strategy of the Dubai government which focuses on achieving high rates of economic growth and upgrading the welfare of the community. — abdulbasit@khaleejtimes.com