Efficient fiscal policy enhanced economic growth: Maktoum

Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, said that the UAE’s strong fiscal performance and diversified government revenues reflect efficient fiscal policy, with overall fiscal balance surplus recorded in 2022, a 31.8% year-on-year growth in revenues, and a 6.1% increase in expenditures, which amounted to approximately Dhs427.12 billion.

Sheikh Maktoum commended the Ministry of Finance’s team efforts in supporting the UAE’s fiscal excellence and sustainable development. He noted that fiscal policy enhanced economic growth and the competitive business environment, which resulted in the UAE’s ranking as the fastest growing economy in 2022.

Mohamed Bin Hadi Al Hussaini, Minister of State for Financial Affairs, said: “Through balanced fiscal planning, the UAE government aims to diversify the local economy, enhance non-oil government revenues, and diversify sources of government revenues, in addition to adopting financial reforms to improve the business environment and attract valuable foreign investments. The government also seeks to increase spending effectiveness by keeping pace with institutional developments and adopting best practices. The government’s implementation of the vision of the wise leadership has resulted in the recovery of the national economy and returning to normal growth in post pandemic era.

This motivates us to boost our efforts to achieve sustainable growth.”

Expenditures went up moderately during 2022, with an increase of Dhs24.74 billion compared to 2021, as a result of the government’s commitment to spend cautiously and rationally, strengthen fiscal buffers, and focus on strategic investments and projects. This serves the UAE’s vision and achieves comprehensive growth in economic, social, and environmental areas, and streamlines the UAE’s journey towards employing fiscal policies to counter the effects of climate change.

The directions of government spending policy in the UAE are reflected in the doubling of the net acquisition of non-financial assets, achieving an estimated growth of 94.5% in 2022 compared to 2021. This reflects the role of these assets in achieving the national strategic goals and supporting the ambition of the wise leadership by placing the UAE on the list of the top economies in the world, in addition to promoting economic diversification and reducing the impact of oil price fluctuations on the government revenues and the local economy.

The UAE posted a surplus in the overall fiscal balance in 2022, and thus this indicator achieved growth. This exceptional growth is due to the quantum leap in government revenues, supported by strong local economic activity. Despite the increase in revenues, the UAE has maintained a cautious and rational spending policy, with this surplus allowing for stronger fiscal buffers to mitigate the impact of potential financial risks.