UAE government revenue hits $32bn in Q1 amid economic boom and diversification efforts

The UAE government’s revenue reached Dh115.6 billion ($31.5 billion) in the first quarter of the year as the country's economy continues to grow and diversification efforts move forward. Expenditure during the period stood at Dh92.5 billion, according to preliminary data revealed on Tuesday by the Ministry of Finance in its UAE Government Finance Statistics Report for Q1. Total revenue included Dh63.5 billion in tax revenue, Dh3.9 billion from social contribution and Dh48.2 billion from property income, the sale of goods and services, fines and penalties, as well as transfers not classified elsewhere, the ministry said. Meanwhile, its expenses comprised net investment in non-financial assets and current expenses, inclusive of employee wages, the use of goods and services, consumption of fixed capital, paid interest, subsidies, grants, social benefits and other transfers. Net lending/net borrowing, an indicator of the financial impact of government activity on other sectors of the economy, stood at Dh23.2 billion. “These results reflect the efficiency of government expenditure and effective utilisation of financial resources in directing them to priority strategic sectors,” said Younis Al Khouri, Undersecretary in the Ministry of Finance. “It also showcases the advancement of the government’s financial framework and its success in developing new and diversified sources of government revenue away from oil, and adopting effective financial policies to manage and develop the government’s financial resources.” The UAE Cabinet approved the country’s federal 2023-2026 budget in October, with a total expenditure of Dh252.3 billion and estimated revenue of Dh255.7 billion. The Cabinet also approved the budget for fiscal year 2023, with total estimated expenses of more than Dh63.06 billion and projected revenue of Dh63.61 billion. “The government’s financial performance [in the first quarter] enhances the UAE’s competitiveness and its move towards sustainable socio-economic development,” Mr Al Khouri said. “The World Bank projects that the UAE’s non-oil sector is expected to achieve strong growth by the end of 2023, driven by robust domestic demand, particularly in [the] tourism, real estate, construction, transportation and manufacturing sectors.” The UAE's economy has made a sharp recovery from the coronavirus-induced slowdown on the back of higher oil prices and measures to mitigate the impact of the pandemic. Gross domestic product increased by 7.9 per cent annually to Dh1.62 trillion at constant prices in 2022, supported by its non-oil sector as the country continues with its economic diversification strategy , according to preliminary estimates from the Federal Competitiveness and Statistics Centre. The government has adopted an array of measures that have enhanced the resilience of its economy, despite global economic challenges such as volatile commodity prices, inflation, uncertainty with regards to monetary policies and supply chain disruptions, Abdulla bin Touq, Minister of Economy, said in March. The measures include 100 per cent foreign ownership of companies, legislation to protect intellectual property and the launch of a strategy to attract talent and skills to enhance the country's position as a permanent centre for creativity and innovation. Business activity in the UAE’s non-oil private sector strengthened last month as new order growth hit a four-year high, the most pronounced improvement since June 2019. The seasonally adjusted S&P Global purchasing managers’ index reading of the Arab world's second-largest economy climbed to 56.9 in June, from 55.5 in May. The non-oil private sector has improved in each of the past 31 survey periods and the increase in employment has extended the current sequence of job creation to 14 months, according to the latest survey. Non-oil growth in the UAE is forecast at 5 per cent this year, according to Emirates NBD. The UAE's economic outlook is positive and is supported by strong domestic activity after it expanded at its fastest pace in more than a decade last year, the International Monetary Fund said last month. “UAE economic growth strengthened in 2022, benefitting from a rapid and effective Covid response, supportive fiscal measures and the benefits of earlier social and business-friendly reforms," it said. Strong reform efforts under the UAE 2050 strategy and advanced progress in comprehensive economic partnership agreements (Cepa) talks will boost trade and integration in global value chains and further attract foreign direct investment, the IMF said. Looking ahead, the Emirates aims to double the size of its economy to Dh3 trillion by 2031, with a focus on boosting non-oil exports and the tourism sector.

UAE government revenue hits $32bn in Q1 amid economic boom and diversification efforts

Financial performance enhances the country's competitiveness and its move towards sustainable socio-economic development, says official