The United Arab Emirates federal government will increase public spending by 3.4 percent next year despite the global economic downturn, according to the draft 2010 federal budget released on Monday. Spending will rise to AED43.63 billion ($11.89 billion) for the fiscal year 2010, but the government expects revenues to match expenditure and to balance the budget, making it the sixth consecutive year without a deficit. The social services sectors, including education and health care, receive the lion's share of the budget, equivalent to 41 percent or AED17.8 billion ($4.85 billion). The budget of the federation of seven emirates - Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al-Khaimah, Umm Al-Qaiwain and Fujairah -reflects “the sound fiscal policy of the government through which it was able to achieve positive growth and no deficit despite the global economic circumstances”, WAM said. Like its neighbors in the Gulf region, the UAE has witnessed a six-year oil-fuelled economic boom. However, the onset of the global downturn triggered a slowdown in the economy, especially in the emirate of Dubai's real estate market, causing suspension of mega construction projects and job layoffs as property prices plunged by 50 percent. In addition to the federal budget, each of the seven emirates adopts its own budget, which is much higher than that of the federal government. With reserves estimated at 97.8 billion barrels of crude oil, the UAE, with a population of about 6 million people among whom more than 80 percent are expatriates, is a leading OPEC member. It exports around 2.2 million barrels of oil per day, of which the emirate of Abu Dhabi, the capital of the federation, contributes over 90 percent of production. Meanwhile, the UAE central bank has informed lenders in the country of plans to introduce a new system for classifying loans and provisions, Al-Khaleej daily reported on Monday. The draft regulation specifies five loans categories ranging from “normal”, “being monitored”, “below normal”, “recuperation doubtful” and “lost loans”, it said.
