World Economic Forum ranks UAE No 1 in efficiency of government spending

The UAE has gained the number one spot in the World Economic Forum ranking for efficiency of government spending, beating Singapore and the United States, which came in at second and third place, respectively. WEF ranked 136 countries in its Global Competitiveness Index for 2017-2018. Saudi Arabia, the world’s biggest oil exporter, came in seventh after Germany, according to the report.

The kingdom and the UAE, the two biggest Arab economies, tightened their purse strings in the past three years following the 2014 oil slump, which slashed government income and prompted spending cuts aimed at narrowing widening fiscal deficits.

In the UAE, the fiscal deficit was less than 5 per cent of GDP in 2016, according to the IMF, as fiscal consolidation efforts were kept up. The Emirates introduced excise tax last year and 5 per cent VAT this year to help shore up government revenue.

It was the first regional country to liberalise energy prices in 2015 to help narrow the fiscal shortfall.

Saudi Arabia has also managed to curtail its deficit, which reached a record 367bn Saudi riyals (Dh359.41bn) in 2015.

This year’s deficit is forecast to fall to 195bn riyals, or 7.3 per cent of GDP, compared with a shortfall of 230bn riyals, or 8.9 per cent of GDP, in 2017.

The kingdom raised energy and water prices and also introduced excise tax last year and VAT this year to help boost revenue.

Saudi Arabia is implementing an economic overhaul plan and various reforms under the 2020 National Transformation Programme, and its over-arching Vision 2030 agenda to help wean the country off oil income and create new revenue streams.