The cabinet of the United Arab Emirates yesterday approved the country’s fiscal budget for 2016.
The Cabinet meeting presided by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, approved next year’s budget was set at AED48.56bn ($13.2bn) with a zero deficit, down from this year’s AED49.1bn ($13.36bn) budget plan.
The decision to cut federal spending, after at least several straight years of rises, suggests that the UAE authorities in general are becoming more cautious about spending because of the impact of the low oil prices on the state’s exchequer.
The level of $80 a barrel is seen as an ideal price for oil as the world economy moves to higher growth, the UAE’s Minister of Economy Sultan bin Saeed Al Mansouri said.
“The minister of energy looks at $80 as the ideal price of oil as we go to the next phase,” Al Mansouri told reporters before the start of an international business conference.
He said the world could not afford to let oil stay at its current level, which is roughly $50 a barrel for Brent crude. The world economy is expected to pick up in the second half of 2016, he added.
“We could see a pick-up in China and some other parts of the world,” Al Mansouri said, adding that the decrease in the oil price was a chance for other economies to review their policies and build growth momentum.
On the impact of low oil prices on the UAE’s own economy, Al Mansouri noted that the UAE had substantial funds that were invested internationally, and said returns on these investments would make up for fluctuations in oil prices.
