DUBAI (The Thursday Times) — The UAE Cabinet has announced the approval of the largest federal budget in the country’s history for fiscal year 2025, marking a pivotal moment in the UAE’s economic trajectory. The budget, which is set at an unprecedented Dh71.5 billion ($19.5 billion), was unveiled following a Cabinet meeting chaired by Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai. This historic fiscal plan demonstrates the UAE’s robust economic health and a balanced approach to income and spending. It is part of the nation’s broader 2022-2026 financial plan aimed at supporting key developmental, economic, and social initiatives.
Economic resilience and recovery
The UAE’s economic recovery has been strong following the global pandemic. The country, which boasts the second-largest economy in the Arab world, saw its GDP grow by 3.4% in the first quarter of 2024. The UAE Central Bank projects further expansion, with overall GDP expected to grow by 4% in 2024, primarily driven by the non-oil sector. Non-oil activities, which are critical to the country’s diversification strategy, are forecast to grow by 5.2% in 2024 and 5.3% in 2025. These projections are attributed to reforms such as 100% foreign business ownership and new tax measures, which have been instrumental in attracting foreign investment.
Revenue and spending breakdown
The 2025 budget, which matches spending and revenue at Dh71.5 billion, aligns with the government’s commitment to fiscal responsibility. Despite its large scale, the budget maintains a “balanced approach” between income and expenditure, ensuring financial stability while still enabling robust investment in key areas.
The 2025 budget reflects an 11.5% increase in spending compared to 2024, signaling the government’s confidence in the strength of the national economy. For the UAE’s overall budget balance, a surplus of 2.4% of GDP is forecast for 2025, following a projected 3% surplus in 2024, according to Emirates NBD Senior Economist Daniel Richards. This underscores the country’s ability to manage its finances prudently while pursuing growth.
Sector Allocations
The 2025 budget focuses on several key sectors, reflecting the government’s priorities for national development. The largest portion, Dh27.86 billion (approximately 39% of the total budget), is allocated to social development and pensions. This includes funding for public and higher education programmes, healthcare services, social affairs, and pensions.
In Education and Healthcare, more than Dh10 billion is earmarked for public and higher education, underscoring the government’s emphasis on building a skilled workforce. Another Dh5.75 billion is designated for healthcare and community prevention services, which are critical to maintaining public health and well-being.
In Pensions and Social Affairs, pensions receive Dh5.71 billion, a significant allocation that reflects the government’s commitment to supporting retired citizens. Social affairs, which focus on community welfare and support services, are assigned Dh3.74 billion.
The second-largest allocation, Dh25.57 billion (about 35.7% of the total), goes to government affairs, funding the administration and operations of various governmental bodies. This reflects the UAE’s focus on maintaining efficient governance as a foundation for its economic and social policies.
The budget also allocates Dh2.58 billion to infrastructure and economic affairs, ensuring continued investment in essential services and facilities that will support the UAE’s development and future growth. Additionally, Dh2.86 billion is designated for financial investments, highlighting the government’s commitment to prudent financial management and the strengthening of its fiscal reserves.
An additional Dh12.62 billion is allocated for other federal expenditures, covering a wide range of national initiatives and strategic projects that contribute to the UAE’s long-term development goals.
Complementary emirate budgets
While the federal budget represents a significant portion of government spending, it is important to note that each emirate sets its own budget, which contributes to the overall fiscal health of the UAE. For instance, Dubai’s budget for the fiscal period 2024-2026 estimates total spending at Dh246.6 billion, with Dh79.1 billion earmarked for 2024 alone. In January, Sharjah also approved its 2024 general budget, amounting to approximately Dh40.83 billion, the largest in the emirate’s history.
These complementary budgets underscore the importance of emirate-level fiscal policies in shaping the UAE’s broader economic landscape. Each emirate’s spending priorities contribute to the national goals of sustainable development, economic diversification, and social welfare.
