Budget proposes spending of $18.4bn for next year
Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, has approved the emirate’s budget for 2023 to 2025 that allocates Dh205 billion ($55.81 billion) of expenditure.
Sheikh Mohammed also approved Law No 23 for the general budget for the fiscal year 2023.
The emirate has earmarked Dh67.5 billion for spending next year alone as it continues to drive growth momentum, expand its economic base and meet goals of Dubai Strategic Plan 2030, the Dubai Media Office said on Thursday.
The emirate expects to achieve a public revenue of Dh69 billion next year, nearly 20 per cent up from the budget for this year’s fiscal year.
Oil revenue represents only about 5 per cent of the total expected revenue for next year, underlining the financial sustainability and diversification of the emirate.
“This budget reflects Dubai’s commitment to meet the city’s future aspirations locally and globally,” Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, said on Twitter.
“Dubai’s 2023 budget proposes expenditures of Dh67.5 billion and revenues of Dh69 billion. Dubai government aims to serve citizens, support businesses and ensure availability of best services for everyone.”
Dubai’s economy, which bounced back strongly from the slowdown caused by the Covid-19 pandemic, has picked up further momentum this year, driven by economic activity around Expo 2020 Dubai and robust performance of its property and tourism sectors.
The emirate’s business environment has steadily improved, with business activity in Dubai’s non-oil private sector economy expanding at a robust pace, driven by a boost in new orders.
The emirate, the commercial and trading centre of the Middle East, has allocated 34 per cent of total government expenditure of next year’s budget to social development.
This includes sectors such as health, education, scientific research, housing, care for needy families and women and children, reading, translation and programming initiatives, development of youth and sports, care for senior citizens and retirees, and care for people of determination. Expenditure in this area represents an increase of 4 per cent on this year’s budget.
The Dubai government has also allocated 20 per cent of total expenditure to the security, justice and safety sector.
Spending on infrastructure, including roads, tunnels, bridges, transportation, sewage stations, parks, renewable energy sources and waste treatment facilities accounted for 41 per cent of total spending.
Placing emphasis on supporting the public services sector, government excellence, creativity, innovation and scientific research, the emirate has allocated 5 per cent of total government spending to develop performance and foster a culture of excellence, innovation and creativity.
“The three-year budget cycle sends a strong pro-growth message to Dubai’s business sectors and reflects Dubai’s focus on developing its financial plan annually in line with global developments,” said Abdulrahman Saleh Al Saleh, director general of the Department of Finance (DoF) for the Dubai government.
“The emirate seeks to provide economic incentives to attract investments, enhance the emirate’s competitiveness, and contribute to the implementation of benefits and targets that form part of the Dubai Strategic Plan 2030 and beyond.”
Grants and social support expenditure will account for 24 per cent of next year’s total budget expenditure, while general and administrative expenditure also makes up 24 per cent.
The budget places high priority on the housing sector through Dubai’s Housing Programme as part of a plan for the next 20 years. The government has allocated 7 per cent of total expenditure to construction.
Dubai is also keen to hedge against any situation that may result from global crises by allocating a special reserve of 5 per cent of the total expected expenditure in the budget.
To enable this, Dubai has maintained a debt service ratio that does not exceed 6 per cent of its total expenditure, as part of its disciplined financial policy, Dubai Media Office statement said.
“The 2023 budget meets the requirements of the Dubai Strategic Plan 2030 development project and beyond and serves as a transparent statement of the emirate’s stable financial position,” said Arif Abdulrahman Ahli, executive director of planning and general budget sector at DoF.
“The budget reflects the Dubai government’s disciplined financial policies based on international best practices. An operating surplus of 4.6 per cent of total revenues ensures that Dubai maintains high levels of financial sustainability.”
The emirate’s headline seasonally adjusted S&P Global purchasing managers’ index reading stood at 56, above the neutral 50 mark separating expansion from contraction.
Companies in the emirate increased their headcounts at the fastest pace in about three years, despite global economic headwinds.
The emirate’s economy grew by 6.2 per cent in 2021, according to preliminary data from the Dubai Statistics Centre. In the first three months of this year, Dubai’s gross domestic product expanded 5.9 per cent, according to government data.
The UAE economy is set to grow by more than 6 per cent this year, after expanding by 3.8 per cent in 2021, according to the International Monetary Fund.
An expansion of 6 per cent would be the highest since 2011, when the economy grew by 6.9 per cent.
The property sector, one of the central planks of the emirate’s economy, also continues to make a strong recovery.
Dubai’s prime residential market is set for the world’s strongest growth next year, according to a new report by consultancy Knight Frank. Prices have been rising across various segments of the market and are likely to end the year about 50 per cent higher than last year on aggregate amid the wider economic recovery, the report said.
Average prices rose by 8.5 per cent for apartments and 13 per cent for villas, in the year to October, data compiled by property consultancy CBRE showed.
The tourism sector has also performed strongly, driven by the Expo 2020 boost. Dubai has topped the list of cities with the highest spending by international visitors this year, pulling ahead of Doha and London in the top three places, the World Travel and Tourism Council (WTTC) found.
The Gulf tourism and finance hub has raked in $29.4 billion in international visitor spending so far this year, overtaking Doha, where tourists spent $16.8 billion and London with $16.1 billion, WTTC said in its latest Cities Economic Impact report.
Dubai has also reached 85 per cent of the pre-pandemic number of international tourists to the emirate in the first nine months of this year.
The city hosted 10.12 million overnight visitors from January to September, compared to 12.08 million in the same period of 2019 before the pandemic, latest government data indicates.