UAE Cabinet approves 2023-2026 federal budget with total expenditure of $68.69bn

The UAE Cabinet on Monday approved the country’s federal budget for 2023 to 2026 with a total expenditure of Dh252.3 billion ($68.69bn) and estimated revenue of Dh255.7bn.

The announcement followed the Cabinet’s meeting at Al Watan Palace in Abu Dhabi, which was chaired by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai.

“The budget of the union is sustainable and balanced, and it is a major driver of the union government and its development ambitions for the people of the union,” Sheikh Mohammed wrote in a tweet.

“I chaired the Cabinet meeting at Qasr Al Watan in Abu Dhabi. We approved the federal budget 2023-2026 … The federal budget is a major driver of the government’s development ambitions and plans,” state news agency Wam quoted Sheikh Mohammed as saying.

The Cabinet also approved the budget for fiscal year 2023, with total estimated expenses of Dh63.06bn and estimated revenue of 63.61bn, the Ministry of Finance said on Monday.

The budget estimates 11 per cent growth in government revenue in the next fiscal year, with expenditure growing at 3.9 per cent, Wam reported.

The allocation of Dh24.8bn for social development and benefits represents the largest proportion of the 2023 budget at 39.3 per cent of overall expenditure.

It includes Dh9.8bn earmarked for public and university education programmes, Dh4.8bn allocated to the healthcare and community protection sector, Dh3.5bn to social affairs and Dh5bn to pensions.

Expenditure of Dh23.9bn on government affairs was the second-largest allocation, or 38 per cent, of the overall budget in the 2023 fiscal year, the ministry said.

The Cabinet approved the allocation of Dh2.4bn for infrastructure and economic resources and set aside Dh2.1bn for the financial investments sector, including Dh753m for federal investment projects.

With an allocation of Dh9.8bn, other federal expenses amount to 15.5 per cent of the 2023 budget.

The federal budget is an “essential pillar in the UAE’s development process” and its main objective is to “strengthen the federal government in pursuit of its developmental, economic and social goals”, Sheikh Maktoum bin Mohammed, Deputy Prime Minister, Minister of Finance and Deputy Ruler of Dubai said.

“The federal budget is subject to continuous reviews in order to keep pace with all changes, trends and directives. Our goal is to ensure that the federal government operates with the highest standards of financial efficiency,” he said.

The UAE economy made a strong rebound from the coronavirus pandemic-induced slowdown last year and the pace of economic momentum has continued to improve this year on the back of government initiatives and higher oil prices.

Brent, the benchmark for two thirds of the world’s oil, touched highs of about $140 a barrel after Russia’s military offensive in Ukraine in February.

While it has since dropped from those levels on demand concerns and the slowing global economic growth, Brent is still up more than 25 per cent since the start of this year.

The country’s economic output, which expanded 3.8 per cent in 2021, is expected to grow 5.4 per cent and 4.2 per cent in 2022 and 2023, respectively, according to the latest projections from the UAE Central Bank.

Emirates NBD recently raised its UAE growth forecast to 7 per cent in 2022, due to a higher estimate for the energy industry’s output and the “robust growth” of its non-oil sector, setting up the country for its fastest annual expansion since 2011, when output grew by 6.9 per cent.

Meanwhile, Abu Dhabi Commercial Bank projects growth of 6.2 per cent, also driven by strong real non-oil gross domestic product growth.

The UAE’s non-oil sector expanded by more than 6 per cent in the first three months of the year, largely due to the containment of Covid-19, the easing of pandemic-related restrictions, Expo 2020 Dubai and the recovery in global travel, the Central Bank said.

The government’s net operating surplus more than doubled in the first quarter of this year as higher oil prices boosted revenue, according to data released by the Ministry of Finance earlier this year.

The operating surplus for the three-month period to the end of March rose to Dh36.4bn, from Dh15.9bn posted in the same period in 2021.

Last October, Sheikh Mohammed approved the UAE budget for 2022, with a total expenditure of Dh58.93bn.

In June, the Federal National Council said the government planned to boost its 2022 federal budget by spending an additional Dh1.23bn.

The increased spending will come from the federal government’s general reserves, the FNC said at the time.

The UAE’s revenue this year was estimated to increase by about Dh374.9m, it said.

Updated: October 11, 2022, 8:00 AM