2010 budget deficit slashed by half
The Dubai government's overall budget deficit for 2010 is under Dh6bn, less than half the Dh12.94bn deficit for 2009, according to the updated prospectus of the Dubai Department of Finance's $4bn sovereign bond published on the London Stock Exchange website yesterday.
"The Dubai government has budgeted government revenues of Dh29.4bn in 2010, slightly higher than the revenues realised in 2009, and has budgeted expenditure to be Dh35.4bn, which is approximately 14 per cent lower than 2009 expenditure, resulting in an overall budget deficit of Dh5.99bn in 2010 compared with a deficit of Dh12.9bn in 2009," the prospectus maintains.
Development expenditure remains a significant item in the Dubai government's 2010 budget, and is expected to be incurred mainly in relation to key projects such as the ongoing construction of Dubai Metro infrastructure, the prospectus further adds.
Approximately Dh10.7 billion of total public spending (which represents approximately 30 per cent of total government expenditures) is budgeted for infrastructure development in the 2010 budget. The budget deficit for 2010, at Dh5.99 billion, represents less than 2 per cent of Dubai's overall nominal GDP in the year 2008.
A Dubai government statement issued yesterday said that had mandated Deutsche Bank, HSBC and Standard Chartered Bank as Joint Lead Managers for a benchmark dollar-denominated bond. The statement added that the "bond, the proceeds of which will be used for general budgetary purposes, is expected to be launched shortly, subject to market conditions."
The 2010 budget reflects a decline in estimated overall government spending of approximately 14 per cent in 2010 as compared to 2009, reflecting, among other things, the completion of a number of infrastructure projects in 2009.
"In 2009, the Government of Dubai directed that fees for government services should not be increased in the near term to reduce the strain on residents during the global downturn. As a result, the fee rates that are charged for various government services have largely remained stable in 2010 as compared to 2009. In addition, overall fee collection is not expected to significantly increase in 2010 as compared to 2009," the prospectus adds.