The Gulf emirate of Sharjah will raise government spending by nearly 7 per cent in 2014, mainly due to a large increase in public sector wages and operating costs, after its ruler approved the new state budget on Wednesday.
Sheikh Sultan bin Mohammed al-Qassimi, ruler of Sharjah, the third largest of seven United Arab Emirates, signed the general budget of Dhs15.4 billion ($4.2 billion) for this year, up from Dhs14.5 billion in 2013.
“The increase was particularly in wages and salaries, which have gone up by 16 per cent compared to 2013,” Waleed al-Sayegh, director general of Sharjah’s Central Finance Department, said in a statement.
He said operating expenses had risen by 9 per cent compared to last year.
In recent months, Sharjah has been trying to open more for investors as it is lacking the big oil reserves of Abu Dhabi or the commercial glamour of neighbouring Dubai.
In January, the emirate obtained sovereign credit ratings from international agencies, aiming to raise its profile among investors. It also launched its first business confidence survey in February.
With a population of under 1 million, Sharjah has been mainly focusing on developing its tourism and manufacturing industries.
Some 47 per cent of the budget has been allocated to the economic sector, while social development and infrastructure got about 11 per cent and 26 per cent, respectively.
Revenue is seen rising by 8 per cent this year, the department of finance also said but did not give the overall figure. It also did not say whether a surplus or deficit was planned. Officials were not immediately available to comment.
Sharjah’s budget is roughly half of that of Dubai and accounts for around 5 percent of total government spending in the UAE, where oil producing Abu Dhabi is the source of around 74 per cent of the overall state expenditure.
Government spending is a key driver of the Gulf Arab oil exporting economies, which mostly peg their currencies to the U.S. dollar. However, timely fiscal data are hard to find in the secretive region, making business planning challenging.
In nominal terms, the size of Sharjah’s economy has tripled over the past decade to Dhs72.4 billion in 2012. But it accounts for only a little over 5 per cent of the UAE economy.