UAE records $9.9bn fiscal surplus in 2011

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View of the UAE Ministry of Finance headquarters in Abu Dhabi. Photo – United Arab Emirates Ministry of Finance

The United Arab Emirates’ finance ministry said on Monday the state recorded a budget surplus of AED36.2 billion ($9.9 billion) in 2011, as it released the data to public for the first time.

The ministry said the figures included the federal budget as well as the fiscal balances of all seven emirates which form the UAE.

Saeed al-Yateem, executive director of revenue and budget at the ministry, told a news conference that the data would now be released every quarter starting next year.

Analysts believe this step could prove vital in increasing the confidence of foreign investors in debt issued by Dubai, Abu Dhabi and other emirates.

Some of the emirates, including oil-rich Abu Dhabi which accounts for around 78% of total UAE spending, have not been publishing budget plans or final accounts.

Dubai was hit by a corporate debt crisis in 2009, eventually receiving a bail-out of at least $10 billion from Abu Dhabi.

According to a Reuters calculation, the surplus revealed on Monday was equivalent to 2.9% of the 2011 gross domestic product of the UAE, the world’s third largest oil exporter.

An International Monetary Fund report in June estimated, based on government data, that the UAE’s fiscal balance swung to a surplus of 38.6 billion dirhams in 2011 after two years of deficits.

According to the IMF report, the country posted a deficit of AED23 billion or 2.1% of GDP in 2010.

Yateem said the ministry would soon release consolidated data for the first three quarters of 2012 and would also begin publishing annual, consolidated budget plans for the UAE.

The ministry said government expenditures hit AED343.7 billion in 2011, while revenue was 379.9 billion. The figures released were well below the IMF June estimates of 401.5 billion and 440.1 billion respectively, Reuters report said.

The IMF estimates consolidated only the accounts of the federal government with those of Abu Dhabi and Dubai, the two largest emirates, as well as Sharjah.

According to a Reuters poll of analysts, the federal government and all its emirates together are expected to run a comfortable budget surplus of 6.4 percent of GDP this year on an aggregate basis.

Yateem said the ministry was submitting its 2013 federal budget draft to the cabinet, but declined to give details. In 2012, the federal budget deficit is expected to stay around AED2 billion, he added.

“We are not going to reduce the budget, we will cover it (the federal budget gap) from our reserve,” he told reporters.

The federal budget accounts for only around 11% of overall fiscal spending in the UAE as most expenditure is conducted by Abu Dhabi.

Khalid al-Bustani, the ministry’s assistant undersecretary for international financial relations, told reporters on Monday that the ministry had done its part and the draft was now in the legislative process. He did not comment further.

Until now, the respective governments of some of the UAE’s seven emirates have issued bonds separately.

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