Dubai 2016 budget eyes 12% rise in spending

Saudi Aramco official, ministers to speak on budget

DUBAI: Dubai plans to raise state spending by 12 percent in 2016 as it invests in infrastructure to sustain economic growth, but an equal rise in revenues will allow the emirate to balance its budget, the government said yesterday.

The ruler of Dubai, Sheikh Mohammed bin Rashid Al-Maktoum, approved spending next year of 46.1 billion dirhams ($12.6 billion), up from 41.2 billion dirhams in the 2015 budget plan. The 2015 budget featured a 9 percent rise in spending. It is the second year in a row that Dubai, which came close to defaulting on its debt in 2009 because of a real estate crash, expects to avoid posting a deficit.

Economies in the Gulf, where Dubai is a leading trade and business centre, are slowing because of low oil prices. But the government said it expected to boost its income by 12 percent next year through additional revenue from government services, which would provide 74 percent of total income. It said revenue would increase on the back of strong economic growth and changes to the fees for some services. Thirty-six percent of state spending would go towards wages and salaries, as the government provided 3,000 new jobs for its citizens. Spending on infrastructure, transport and economic development would rise by slightly more than 12 percent, accounting for 36 percent of all spending, while 5 percent of spending would go to servicing Dubai’s debt.

Saudi budget

A senior official of state oil giant Saudi Aramco and the ministers of Economy and Planning, Finance, and Water and Electricity will appear at a news conference on Saudi Arabia’s 2016 state budget today, official sources said yesterday.

The news conference is scheduled for 1200 GMT today and details of the budget are expected to be announced at or shortly before that time. The ministers are expected to give presentations on their parts of the budget. The Maaal financial website reported that Aramco would be represented by chief executive Amin Nasser.

In recent years, the government has released the annual budget without holding a news conference. But the 2016 budget is expected to contain major changes in spending and possibly revenue policy in order to cut a deficit caused by low oil prices, and officials may want to explain these to the public. The deficit for this year is expected to come in at about 400-500 billion riyals ($107-133 billion), around 20 percent of gross domestic product, prominent Saudi economists estimate.

They expect the 2016 budget to plan spending of about 800 billion riyals, roughly 20 percent lower than their estimate of this year’s actual spending. The result, if Brent oil stays around $40 a barrel next year, could be a deficit of around 200 billion riyals - still large, but enough of a cut to let Riyadh slow the liquidation of its foreign assets. Minister of Economy and Planning Adel Fakieh took office in April and, in the administration of Deputy Crown Prince Mohammed bin Salman, has begun to play a key role in planning Saudi Arabia’s strategy to cope with an era of cheap oil. As the company handling Saudi crude oil production, Aramco is central to economic policy and government finances. — Reuters