Bloomberg News

U.A.E. Forecasts 400 Million-Dirham Budget Deficit in 2012

October 11, 2011

(Updates with comparative figures in third paragraph.)

Oct. 11 (Bloomberg) -- The proposed United Arab Emirates federal budget for next year will include a 400 million-dirham ($109 million) deficit, state-run WAM reported after Cabinet ministers approved the spending plan today.

The projected shortfall compares with a federal deficit of 3 billion dirhams in the current budget, which was approved by the Federal National Council in December.

Revenue for 2012 is forecast at 41.4 billion dirhams and spending at 41.8 billion dirhams, according to the news agency. The 2011 budget included revenue of 41 billion dirhams. Social- services spending for next year is expected to be 19.7 billion dirhams, an increase from the 15 billion allocated for 2011.

While the U.A.E. has been spared the level of social unrest that toppled the leaders of Tunisia and Egypt, it has taken measures to appease people in outlying areas. The government said in June it would allocate 7 billion dirhams of its budget to housing loans for citizens to maintain “social stability.” In March, the government announced a 5.7 billion-dirham package of water and infrastructure projects in the northern emirates.

WAM didn’t say whether the 2012 budget gives a projected oil price on which the latest budget is based for the U.A.E., which controls about 7 percent of the world’s crude supply.

The government boosted spending for health care and higher education by 100 million dirhams in the spending plan, WAM said. Government-affairs spending, which include defense, justice, foreign affairs and the interior ministry, will account for 42 percent of the budget, or 17.5 billion dirhams. Spending on infrastructure, including roads, schools and hospitals, will total 600 million dirhams.

The economy is forecast to grow 3.3 percent this year and 3.8 percent in 2012, the International Monetary Fund said in September.

The United Arab Emirates is a federation of seven emirates on the Persian Gulf -- the capital of Abu Dhabi, Dubai, Ajman, Sharjah, Ras Al Khaimah, Fujeirah and Umm al-Quwain.

--Editors: Heather Langan, Louis Meixler

To contact the reporters on this story: Vivian Salama in Abu Dhabi at vsalama@bloomberg.net.

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net.


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