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Aden - Yasmine El Tohamy - Emirate to provide economic incentives to attract more investments.
Dubai on Sunday said it can achieve an operating surplus of almost Dh2 billion due to its prudent fiscal polices and also set the debt service rate at no more than 5 per cent of its expenditure.
"We are capable of achieving an operating surplus of Dh1.96 billion due to the adoption of disciplined financial policies, which contributes to the development of infrastructure programmes for the emirate and affirms the financial sustainability policy pursued by the emirate," said Abdul Rahman Saleh Al Saleh, director-general of Dubai's Department of Finance.
The emirate will maintain a debt service rate of no more than 5 per cent of its total expenditure in the fiscal year 2020, he added.
Dubai on Sunday approved a Dh196 billion three-year budget for 2020-22 and Dh66.4 billion budget for 2020 alone, the largest ever in its history. The budget will stimulate the emirate's entire economy and support the organisation of Expo 2020.
State spending will increase by 17 per cent to a record Dh66.4 billion, compared to the original budget plan of Dh56.8 billion for 2019.
"We are keen to provide economic incentives with an impact of attracting more investments, and work to improve the emirate's competitive position and implement the goals of the Strategic Plan 2021 and beyond," Al Saleh added.
"The fiscal year 2020 budget well expresses transparently the stable financial position of the emirate of Dubai, by implementing disciplined financial policies that rely on international best practices. Achieving an operational surplus is what realises the desired highest levels of financial sustainability for Dubai," said Arif Abdulrahman Ahli, executive director of the planning and budget sector at the Department of Finance.
Dubai has projected its economy will grow 3.2 per cent in 2020, faster than the 2.1 per cent growth in 2019.
Zachary Cefaratti, CEO of Dalma Capital, said from 2016-19, there was contractionary monetary policy in the form of rising interest rates due to the dirham-dollar peg as well as introduction of value-added tax in 2018.
"We now have a return to expansionary monetary policy as interest rates have declined in the second half of 2019 and are likely to remain stable at historically-low rates, in combination with fiscal stimulus from Dubai and Abu Dhabi as well as expansionary macro-prudential policies from the UAE central bank," Cefaratti added.
The government of Dubai estimates 25 per cent increase in public revenues to Dh64 billion despite reduction in some fees.
Oil revenues accounted for 6 per cent while non-tax revenues account for 60 per cent of total expected revenue. Tax revenues account for 29 per cent, while revenues from government investment represent five per cent.
The government has dedicated Dh8 billion to develop infrastructure projects. In terms of expenditures, salary and wage allowances account for 30 per cent while the grant and support expenditure account for 24 per cent to provide the best health, education and social services to citizens, and improve the level of public services and promote human development.
Spending on construction projects reached 12 per cent of government expenditure, indicating the continued development of Expo 2020's infrastructure, which will later remain in place to serve all economic and social sectors in the emirate.
The government announced a special reserve of 3 per cent of total expected expenditures for hedging and preparing for the Expo 2020 period. Spending in the social development sector in the areas of health, education, housing, women and children's care, as well as developments including reading, translation and coding initiatives, represents 30 per cent of total expenditure.
The government's concern for security, justice and safety sees 19 per cent of total expenditure being allocated to support and enable this sector to perform professionally and proactively. This sector has become one that the emirate prides itself on in the global arena.
Dubai allocated 46 per cent of total spending on infrastructure and transportation. Five per cent of the total expenditure has been allocated to developing performance a culture of excellence, innovation and creativity.
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