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Dubai 2011 budget deficit falls to $1bn, spending up
2012-04-25
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Dubaiís budget deficit narrowed sharply to AED3.7 billion ($1 billion) last year, helped by higher oil revenues and lower spending on development projects, a sovereign bond prospectus produced by the emirate shows.


The shortfall was equivalent to 1.2 percent of Dubaiís 2010 gross domestic product, according to Reuters calculations, down from 2 percent of GDP the previous year.

Dubai, which has been gradually recovering from a debt crisis in 2009-2010, has yet to issue GDP data for last year.

Government expenditures for the Gulf trade and business hub edged up slightly to AED35.98 billion last year compared with 2010 and came above an initial 33.68 billion plan, the prospectus for a Dubai sovereign bond issue, seen by Reuters, showed.

Dubaiís spending on infrastructure projects fell by 20 percent to AED7.09 billion in 2011 and stood at half of the level in 2008, when the global financial crisis burst its property bubble, stalling projects worth billions of dollars.

Revenue in Dubai, whose budget makes up around 11 percent of all public funds spent in the UAE a year, jumped 8.1 percent to AED32.28 billion in 2011 from the previous year, helped by an increase in average oil prices.

Dubaiís budget is prepared on a cash basis and does not consolidate the budget data for government-owned companies except for the dividend income from its sovereign wealth fund ICD. The 2011 budget figures are yet to be audited.

The emirate plans to launch a dual-tranche Islamic bond imminently, the issue arrangers said on Tuesday, that could raise at least $1 billion and attract healthy demand. The proceeds will be used to cover the deficit and for debt refinancing, a senior government official told Reuters.

Dubaiís direct government debt stood at AED113.6 billion ($30.9 billion) as of the end of March, the prospectus also showed. However, analysts polled by Reuters in March put the emirateís overall debt including government-owned firms at an estimated $118 billion, or 144 percent of GDP.

The emirate drew up its 2012 budget with spending plans worth AED32.26 billion and a deficit of 1.83 billion as project spending should fall to AED5.91 billion, the lowest level in six years.

Dubai, which accounts for nearly a third of the UAEís GDP, is aiming for economic growth of 4.5 percent this year, up from an estimated expansion of more than 3 percent in 2011, the emirateís top official said in February.

But worsening of global financial conditions could make it more difficult to roll over some of the maturing debt of UAE government-linked entities, the International Monetary Fund said in March, with about $32 billion of sovereign and government-linked debt estimated to mature in 2012, of which $15 billion in Dubai.

Source arabnews.com
 





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