The United Arab Emirates’ federal budget deficit has hit AED2.8 billion ($762 million) during the first half of this year, a top finance ministry official was quoted as saying on Tuesday.
The Al Ittihad daily quoted Younis al-Khouri, undersecretary and director-general at the ministry, as saying that revenue was AED17.98 billion in the first six months of this year, or 43% of the planned amount for all of 2012. Expenditure was 20.79 billion dirhams, half of the projection for this year, far above the government’s original forecast for the shortfall because of lower-than-expected revenue.
The ministry wants to focus on austerity measures and prioritising expenditures because of the half-year deficit, the newspaper reported.
The UAE government originally marked a AED400 million deficit for 2012, with spending to total AED41.8 billion this year.
According to a June report by the International Monetary Fund, which is based on government data, a deficit of AED2.9 billion was booked, the first in seven years.
According to a Reuters poll of analysts, the federal budget accounts for only around 11% of overall fiscal spending in the UAE, as most expenditure is conducted by the oil-rich emirate of Abu Dhabi. On an aggregate basis, the UAE and all its emirates together are expected to run a comfortable budget surplus this year.
Finance ministry officials were not immediately available to comment on the newspaper report.
Khouri said the ministry was relying on general reserves to cover the gap, echoing July remarks by Finance Minister Sheikh Hamdan bin Rashid al-Maktoum, who said the UAE had no immediate need to issue bonds to cover this year’s deficit.
The UAE has yet to approve a draft bill, debated for over two years, that would allow the federal government to issue bonds and help establish a local debt market. There is still no clear indication of when it will be passed. Until now the respective governments of some of the UAE’s seven emirates have issued bonds separately.