DUBAI, (AFP) — The United Arab Emirates’ top legislative body has approved a 2011 budget with a projected deficit of more than 800 million dollars while passing a new law on public debt, reports said Wednesday.
The budget endorsed by the Federal National Council is based on a deficit of three billion dirhams (817 million dollars, 622 million euros), said The National newspaper.
“It envisages 41 billion dirhams of spending against 38 billion dirhams of projected revenue,” said the English-language daily.
The Emirati government had decided in November to cut its projected 2011 public spending by six percent compared with this fiscal year’s 43.63 billion dirhams.
During Tuesday’s session, the Council also passed a public debt law, stating it should not exceed 200 billion dirhams (54.49 billion dollars) or 25 percent of gross domestic product, said The National.
“The federal government currently has no debts,” Obaid al-Tayer, the minister of state for financial affairs, was quoted as saying by Abu Dhabi’s Al-Ittihad daily.
Tayer added that the new legislation, would only apply to the debts of the federal government in the UAE, a federation of seven emirates including financially troubled Dubai.
The government would draw on its reserves to finance the budget deficit but it could also issue bonds to finance the shortfall, the official said.
In addition to the federal budget, each of the seven emirates adopts its own budget and the total spending in those budgets is much higher than that of the federal government.
With crude reserves estimated at 97.8 billion barrels, the UAE is oil cartel OPEC’s fourth largest producer. It has a population of about six million people, more than 80 percent of them expatriates, mostly Asians.
The Gulf country pumps about 2.32 million barrels of oil per day, of which the emirate of Abu Dhabi, which is also the federation’s capital, contributes more than 90 percent.