Today's Edition
MUSTAFA ABDEL AZIM (DUBAI)
The International Monetary Fund (IMF) expects the primary general budget of the United Arab Emirates to achieve a strong surplus this year, exceeding 5.7% of Gross Domestic Product (GDP), with the likelihood that the budget will maintain high surpluses until 2028, averaging about 4% of GDP annually.
In its "Fiscal Monitor" report, issued twice a year in April and October, the IMF painted a positive outlook for the UAE's public finances for the next five years in terms of budget, revenues, expenditures, public debt management, and various financial indicators.
According to the report's data, which focuses on studying and analysing the latest developments in public finances internationally, the expected primary general budget surplus in 2023 is the second-highest average surplus over the past ten years, following the surplus recorded last year, which was around 10.4% of GDP.
According to the data of the October version of the "Fiscal Monitor" report, the UAE's primary budget is expected to achieve a surplus equivalent to 5% of GDP next year, about 4.5% in 2025, 4.3% in 2026, 4% in 2027, and 3.6% in 2028, with an average of 3.9% annually. According to the report's data, general revenues are expected to constitute about 31.9% of GDP during 2023, compared to 32.8% in 2022.
They are expected to maintain a high level, nearing 30% of GDP until 2028. The data also indicates that general revenues will be around 31.1% of GDP next year, around 30.6% in 2025, 30.3% in 2026, 30.0% in 2027, and 29.6% in 2028.
In terms of public government spending, the IMF expects the UAE to maintain stable levels of public expenditure for the next five years, exceeding about 26% of GDP. Public spending is likely to equal about 26.8% of GDP this year, compared to 22.9% in 2022, indicating a significant increase in public spending. The fund anticipates that public expenditure will be around 26.7% of GDP for the next three years, about 26.6% in 2027, and 26.5% in 2028.
The IMF also predicts that the country will maintain a moderate level of public debt from 2023 to 2028. The debt is expected to decrease this year to about 29.4% of GDP, compared to 31.1% in 2022. It will then drop to 28.7% of GDP in 2024, to 28.3% in 2025, to 27.8% in 2026, to 27.4% in 2027, and to 26.9% in 2028. The predictions in the "Fiscal Monitor" report are based on the same database used in the "World Economic Outlook" and "Global Financial Stability" reports. The fund's economists, specialised in individual country affairs, are responsible for preparing the public financial forecasts for these countries.
They assume that the announced policies will be implemented in accordance with the guiding principles set for the "World Economic Outlook" report. On the global level, the report expects the global debt to increase by about one percentage point of GDP annually in the medium term, noting that, excluding the world's two largest economies, the ratio will decrease by about half a percentage point annually. It warns of the global debt ratio approaching 100% of the global GDP by the end of the current decade.
