Dubai reveals largest-ever budget for 2020 to ‘stimulate economy’

Dubai has announced a three-year budget with a total expenditure of Dhs196bn from 2020 to 2022, Dubai Media Office announced on Sunday.

“The budget for the financial year 2020 is the largest in the history of Dubai, at Dhs66.4bn, to meet the emirate’s aspirations to stimulate the overall economy and establish Expo 2020 Dubai as one of the most prominent editions to be held in the history of the World Expo,” a message on Twitter said.

The budget for the financial year 2020 is the largest in the history of #Dubai, at AED66.4 billion, to meet the emirate's aspirations to stimulate the overall economy and establish @Expo2020Dubai as one of the most prominent editions to be held in the history of the World Expo. pic.twitter.com/jgZHdKzgeH

— Dubai Media Office (@DXBMediaOffice) December 29, 2019

The 2020 budget will continue to focus on social services, which include healthcare, education, culture initiatives and social housing, in addition to developing the social benefits fund to support and stimulate families, it added.

.@HHShkMohd adopts a 3-year budget cycle from 2020 to 2022, with a total expenditure of AED196 billion, as a continuation of the #Dubai government’s approach to boosting the emirate’s overall economy. pic.twitter.com/hvrxPjO2YJ

— Dubai Media Office (@DXBMediaOffice) December 29, 2019

The emirate is “capable of achieving an operating surplus of Dhs1.96bn due to the adoption of disciplined financial policies, which contributes to the development of infrastructure programmes for the emirate and affirms the financial sustainability policy pursued by the emirate” said Abdulrahman Saleh Al Saleh, director general of the Dubai government’s Department of Finance (DOF).

“The budget for the fiscal year 2020 has been approved with total expenditure up by 16.9 per cent compared to the previous year. This comes as part of supporting the Dubai Plan 2021 and the Expo 2020 Dubai, as well as moving forward in support of the emirate’s macro economy.

“We are keen to provide economic incentives with an impact of attracting more investments, and work to improve the emirate’s competitive position,” he added.

Projected government revenues for 2020

The Dubai government estimates public revenues to reach Dhs64bn, an increase of 25 per cent year-on-year.

“This increase comes despite the economic incentive measures adopted by the government that would reduce some fees and freeze the increase in fees for three years, and the decision to not impose any new fees without providing a new service,” a statement said.

The revenues are based on ongoing operations in the emirate and do not rely on oil revenues, which only account for 6 per cent of total projected revenues for the fiscal year 2020.

Non-tax revenues account for 60 per cent of the total, tax revenues account for 29 per cent, and revenues from government investment represent 5 per cent.

Projected government expenditure for 2020

The 2020 budget will serve the requirements of “population growth and benefits arising from the hosting of Expo 2020 Dubai and the continuous development of infrastructure, as well as other goals of the Dubai Plan 2021”, the statement said.

Salary and wage allowances account for 30 per cent of total government spending, while grant and support expenditure account for 24 per cent.

Spending on construction projects reached 12 per cent of government expenditure.The government has also allocated Dhs8bn to develop infrastructure projects and prepare for future commitments, in conjunction with the completion of some projects, the activation of the public private partnership law and the development of project financing mechanisms through long-term financing, the statement added.

For the first time ever, the government has announced a special reserve of 3 per cent of total expected expenditures, in accordance with the principle of hedging and preparing for the Expo 2020 period.

Dubai will maintain a debt service rate of no more than 5 per cent of its total expenditure in the fiscal year 2020, the statement added.

Sectoral distribution of government expenditure

A total of 46 per cent has been set aside for Dubai to develop its economy, infrastructure and transportation industries.

Spending in the social development sector in the areas of health, education, housing, women and children’s care, as well as developments including reading, translation and coding initiatives, represents 30 per cent of total expenditure.

While 19 per cent of total expenditure has been allocated to the security, justice and safety sector, 5 per cent has been allocated to developing performance and “instilling a culture of excellence, innovation and creativity”.

Dubai’s 2019 budget saw spending rise marginally by 0.35 per cent to Dhs56.8bn, compared to Dhs56.6bn in the 2018 budget.

The 2018 budget was the largest in the history of the emirate, with spending representing a 19.5 per cent rise from 2017.

Read: Dubai reveals 2019 budget with marginal rise in spending, support for SMEs