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Increased Spending to Create Opportunities for Investment

DUBAI - Dubai government move to raise spending will create opportunities for both local and foreign investors and the economy to continue its expansion, comment experts after the announcement of Dubai budget 2009.

Dubai on Saturday unveiled a deficit budget of Dh37.7 billion for 2009, representing a record 42 per cent increase in public sector spending.

This is the first deficit budget in the Emirate history. The fiscal deficit will be Dh4.2 billion as projected revenues from the public sector in 2009 will be Dh33.5 billion - a 26 per cent increase over the last year’s Dh26.5 billion.

Shuaa Capital Chief Financial Officer Michael Burgess said, “Dubai is doing the right thing by stimulating the local economy through government spending. Increased government spending will soften the impact of the credit crisis, but it will be necessary for Dubai to access sources of funding to fund the deficit. Obtaining a sovereign rating is even more important now so that Dubai can begin to issue government bonds or sukuks to raise cash.”

Sohail Zubairi, CEO, Dar Al Sharia

“Government of Dubai has acted in a predictable manner whereas it has bucked the trend once again which has become its hallmark. Substantial increase in the budget outlay in the midst of credit crisis goes to show the serious commitment of Dubai government has towards Dubai Strategic Plan 2015 and the availability of resources to implement the same despite the crisis. I believe the small first time deficit will be plugged judiciously during the course of the year.”

Monica Malik, economist, EFG-Hermes

“It is expected that Dubai government’s spending would remain expansionary to support economic outlook at this time of global downturn and focus on capital spending.”

Dr Prem Jagyasi, Healthcare Management Consultant

“Increasing the pie of healthcare spending is another pointer to the pioneering efforts of the government. The emirate has always prided in being a front-runner of the change in healthcare provision with its visionary initiatives such as formation of Dubai Health Authority, Healthcare City amongst other. Enhanced spending along with compulsory health schemes and better healthcare infrastructure will only ensure sustained momentum”

Faisal Hasan, head of research, Global Investment House

“If you look at all GCC countries this year, they will all be projecting deficit because their revenue is based largely on oil prices and oil output. Dubai’s plan to substantially raise expenditure is a step in the right direction that will bring more liquidity into the system which is what Dubai needs to support its mega infrastructure projects.”

Nawfal A Jourani, Chief Marketing Officer, Dubai Maritime City

“I strongly believe in the leadership of the Emirate and all the decisions taken by the government, are in the best interest of people of Dubai. This year’s budget also reflects the desire and commitment of the government to do what is the best possible for the growth and development of the Emirate. I am confident that it will have positive outcome.”

R.M. Raghu, Senior Vice-President-Research, Kuwait Financial Centre

“With most governments in the region expected to post deficits this year because of low oil prices, the only hope for Dubai to kick start its economy is through increased spending. This will provide the boost that companies need at this time of crisis.”