Dubai unveils budget with slight spending rise

Dubai's government unveiled its budget for 2013 on Monday, setting expenditure at 34.12 billion dirhams ($9.3 billion) and a deficit at 0.5 percent of gross domestic product. Expenditure was forecast only slightly up from 33.68 billion dirhams in this year's budget, while revenues were expected to amount to 32.62 billion dirhams, up from 29.91 billion dirhams in 2012, it said in a statement. The budget forecast the deficit to drop to 1.48 billion dirhams, compared with 3.778 billion dirhams predicted for this year. The Dubai government said the focus of the budget was "on a prudent fiscal policy that provides the stimuli necessary to economic growth". The debt-laden Gulf emirate allocated six percent of spending to debt servicing, while 26 percent would be channelled into health, education, housing and social developments. Sixteen percent of expenditure has been set aside for the completion of infrastructure and development projects. Abdul Rahman al-Saleh, the finance department director general, said the budget emphasised a preference to expand expenditure to support the economy but "without sacrificing the strategic objectives... of reducing the deficit". Government fees would represent 62 percent of revenues, while customs and taxes on foreign banks would account for 23 percent. Dubai does not impose a tax on income. Net oil income amounted to 12 percent of total revenues, the statement said. The government did not release figures for actual revenues and expenditure in 2012. Dubai's economy contracted 2.4 percent in 2009 when it rattled global markets over its debt crisis before receiving a $10-billion bailout from Abu Dhabi, its oil-rich partner in the Emirates, and reaching restructuring deals with lenders. The economy has since made a comeback, growing 2.8 percent in 2010, 3.4 percent in 2011, and 4.1 percent on an annual basis in the first half of this year, as tourism, trade and transport keep expanding.