UAE posts budget surplus in 2022, revenues up 31.8%

The UAE posted a budget surplus in 2022 as revenues grew by a record 31.8 per cent and expenditures jumped by 6.1 per cent, amounting to a projected Dhs427.1bn, according to the Government of Dubai Media Office.

Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance said the UAE’s fiscal policy enhanced economic growth and the competitive business environment, resulting in the country ranking as the fastest-growing economy in 2022.

The fiscal performance analysis for 2022 released by the Ministry of Finance showed an increase in tax revenues, driven by streamlining and digitising tax procedures, and the intensification of tax awareness campaigns.

The increase in tax revenues also indicates the recovery of economic activity in the country.

حققت دولة الإمارات إنجازاً استثنائياً في مؤشرات الأداء المالي المجمع على كافة المستويات في 2022 شمل تنوعاً في إيرادات الدولة ونمواً قياسياً فيها على أساس سنوي بنسبة 31.8%، فيما بلغت نسبة نمو النفقات 6.1% لتصل إلى 427.12 مليار درهم، ونمواً بنسبة 94.5% في صافي اقتناء الأصول غير… pic.twitter.com/tCPGUeMRdp

— Maktoum Bin Mohammed (@MaktoumMohammed) September 17, 2023

Other sources of revenue also grew by Dhs19.33bn in 2022 while social contributions reached Dhs14.9bn.

“Through balanced fiscal planning, the UAE government aims to diversify the local economy, enhance non-oil government revenues, and diversify sources of government revenues,” said Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs.

State expenditures rose moderately in 2022, with an increase of Dhs24.7bn compared to a year earlier, as the government seeks to strengthen its fiscal buffers while focusing on strategic investments and projects.

The country doubled the net acquisition of non-financial assets to achieve an estimated growth of 94.5 per cent in the same period, reflecting the government spending policy.

This exceptional growth is due to the quantum leap in government revenues, supported by strong local economic activity.

Despite the increase in revenues, the UAE has maintained a cautious and rational spending policy, with this surplus allowing for stronger fiscal buffers to mitigate the impact of potential financial risks.

UAE economy growth

Meanwhile, the UAE’s GDP is projected to grow by 3.5 per cent in 2023, rising to 3.9 per cent next year, according to UBS Global estimates.

Growth is supported by an increase in non-oil activities and strong demand for oil and the country’s energy investments, said Michael Bolliger, chief investment officer, of emerging markets at UBS Global Wealth Management. UAE economy

The country’s non-oil economy is projected to grow by a robust 4.5 per cent this year.

Bolliger said the introduction of a 9 per cent corporate tax this year, following the adoption of a 5 per cent value-added tax in 2018, contributes to bolstering public finances.

These measures along with other initiatives to further reduce the economy’s dependence on the hydrocarbon sector will further diversify the economy. The structural and social reforms and programmes unveiled recently by the UAE are expected to be a positive catalyst to support the country’s ability to structurally grow at a rate of around 4 per cent per annum.

Read: Sheikh Mohammed says 2023 ‘best economic year’ as non-oil trade hits all time high