Dubai would raise spending nine per cent in 2015 under a state budget approved by the emirate’s ruler, designed to keep the economy growing strongly while eliminating its budget deficit, official news agency WAM reported on Saturday.
Economies in the Gulf face financial pressure this year because of the plunge of oil prices. Although Dubai’s oil output provides only four per cent of its revenue, the emirate relies on trade, tourism and investment ties with the rest of the Gulf.
Its 2015 budget plan shows it believes the regional economy will stay healthy enough for revenue to continue expanding rapidly, allowing Dubai to close a budget shortfall that opened up during its 2009 financial crisis.
Spending this year is projected at about Dhs41 billion ($11.2 billion), up from Dhs37.88 billion in the original budget for 2014, WAM quoted a government statement as saying.
Revenue is expected to jump 11 per cent in 2015 from a projected 37.00 billion for 2014, reducing the budget deficit to zero from 882 million last year.
A balanced budget would further reassure investors that Dubai has put its 2009 crisis behind it. The emirate came close to defaulting on its debt because of its real estate crash that year. State-linked companies are still selling assets to meet payments on tens of billions of dollars of debt maturing in coming years.
But a strong economic recovery since 2011 has helped the government rescue its finances, with revenue from government services, which represent 74 per cent of the total, expected to jump 22 per cent this year, partly because of limited rises in some government fees, WAM said.
As a result, Dubai is projecting an operating surplus, or an excess of recurring revenue over recurring expenditure, of Dhs3.6 billion this year.
The surplus would help Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum spend on infrastructure to support future economic growth, including facilities to host the 2020 World Expo.
Dubai’s economy expanded about 4.5 per cent in 2014 and growth is expected to rise to slightly above that level in coming years, a senior official said last month.
Most of the United Arab Emirates’ state expenditures are conducted by the seven individual emirates rather than the federal government. In past years, Dubai has accounted for about 12 per cent of the total.