DUBAI BUDGET KEEPS UP RECORD SPENDING LEVELS

▶ Approval for 2019 expenditure at slightly more than last year with focus on development as Expo 2020 set to bring in millions of visitors, analysts say

The Government of Dubai’s plans to maintain the pace of spending at 2018’s record level, with a focus on the development of infrastructure, indicates the emirate’s intention to retain its competitive edge, analysts say.

Dubai on Tuesday approved its 2019 budget, with higher revenue targets as it prepares to host the global trade fair Expo 2020 that is expected to bring millions of visitors to Dubai next year.

The Government is set to spend Dh56.8 billion, slightly higher than the Dh56.6bn for 2018 – then Dubai’s biggestever budget and 19.5 per cent higher than the previous year, it said in a statement carried by state-run Wam news agency.

The budget plan for this year includes an allocation of Dh9.2bn, specifically for infrastructure projects despite some of the Expo 2020-related developments being complete or nearing completion.

“Although most of the big projects are nearly done for the Expo, the Government maintained Dh9.2bn on infrastructure to ensure the competitiveness of the emirate of Dubai internationally,” said Tariq Qaqish, managing director, asset management, at securities broker Menacorp Finance.

“The Government chose to take a deficit, although slightly lower than last year, but maintain spending, which is a sign of its commitment to maintain Dubai’s position as leading [trading and commercial] hub.”

Dubai estimates that public revenues will reach Dh51bn in 2019, an increase of 1.2 per cent year-on-year. Only 8 per cent of government revenues this year are expected to come from the oil and gas sector.

Non-tax revenues are forecast to account for 64 per cent of the total, while tax revenues are projected to come in at 25 per cent. Revenues from government investment represent just 3 per cent.

The expected rise in revenues comes despite the economic incentives taken by the emirate, which include the reduction of some business fees, a freeze in fee increases for three years, and a decision to not impose any new fee without providing a new service, according to the statement.

In June Dubai and Abu Dhabi announced they were exempting companies from administrative fines for at least the rest of the year, as part of efforts to stimulate business growth. Dubai in April unveiled plans to introduce new measures to help boost economic growth, attract new investment and cut the cost of doing business across sectors ranging from tourism to financial services.

The emirate slashed aviation and municipality fees in July. The Government also scrapped 19 fees related to the aviation industry as it seeks to attract more than Dh1bn of foreign investments into the sector, state news agency Wam reported.

“The Government maintained the same momentum”, as the previous year due to population growth, the benefits of hosting Expo 2020 and continuous development of the infrastructure, Dubai Media Office said on Twitter after the budget was released.

The emirate’s Vision 2021, which includes the development of tourism and aviation sectors, is the driving force behind the economic momentum, it added. “Dubai’s economic growth [rose] 2.5 per cent year-on-year in Q4 17, driven by the emirates’ construction and hospitality sectors. The measures announced [reduction in fees] are likely to give these sectors a further boost,” National Bank of Kuwait said in a report released yesterday.

“Indeed, the Dubai Economy Tracker index leapt from 52.5 [points] in October to a fivemonth high of 55.3 in November, as growth in the construction sector accelerated ahead of the Expo 2020. Tourism was also a major contributor,” it said.

The 2019 budget plan estimates 2,498 new jobs as part of the Government’s strategy for job creation; salary and wage allowances within the budget account for 32 per cent of total government spending.

Spending on the social development sector such as health, education, housing, women and children’s care, as well as reading, translation and programming initiatives, accounts for 33 per cent of total government spending in 2019, accosays the budget statement.

“Spending on health care and education indicates the commitments of the Dubai Government towards a better future for its citizens,” Mr Qaqish said.

The budget plan for this year includes an allocation of Dh9.2bn, specifically for infrastructure projects