Participatory budget

The UAE government prepares its budget in a participatory method through several steps to make sure that financial resources are spent to meet society needs and aspirations. Before drafting the budget, the government studies the ideas and trends in society. During the budgeting process, Federal National Council receives the draft budget for discussion and providing their feedback to Supreme Council for approval.

 

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Introducing the general budget

The general budget is the financial programme of the federal government used to achieve economic and social development. This is accomplished through the optimal distribution and efficient use of resources within the framework of the federal strategy on the expected spending by federal authorities during the coming fiscal year, provided that income and expenditure are balanced.

According to the Federal Decretal Law No. 26 of 2019 on Public Finance, a separate budget for federal service authorities may be earmarked and submitted to Ministry of Finance (MoF) for approval. Also, all federal authorities may, by virtue of a Cabinet resolution, be assigned to prepare a draft medium-term budget. The Cabinet resolution shall determine the budget’s terms in years provided that it includes annual estimates for both income and expenditure, as approved by the Cabinet.

Issuing the budget law

Every year during the third month of the fiscal year, Minister of Finance issues a circular containing steps for the preparation of the draft budget for the following year. The circular includes budget cap, approved strategic objectives, indicators, revenue forecast and a fixed deadline for submitting a draft budget to move.

Each federal authority determines its programmes, plans and Key Performance Indicators (KPIs) according to the strategic plan approved by the Cabinet within the budget cap. All authorities must also submit their initial forecasts for revenue and expenses allocated to chapters, line items, programmes and activities agreed upon, along with performance measures and efficiency indicators according to the circular issued by the minister, which specifies submission deadline. The fiscal year is composed of 12 months, starting from 1st January and ending on 31st December of each year.

Steps for participatory budgeting

The Federal Budget goes through 7 steps as stated below to be finally approved. In steps 5, Federal National Council (the parliamentary body of the UAE) receives the draft budget for discussion. Competent committee in Federal National Council discusses the budget of each sector and provides their feedback to the Supreme Council for approval.
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Federal budgeting process

The budgeting process is initiated by releasing a financial circular on preparation of the draft budget for the following fiscal year. This financial circular is issued in accordance with the law, and based on the UAE Cabinet’s Resolution No 1/181 of 2008, which mandates all the ministries and federal authorities to do the following:

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Based on the general strategic objectives of the federal government (UAE Vision 2071), all ministries and federal authorities prepare plans for their annual budgets, under the supervision of Ministry of Cabinet Affairs. This is to ensure that these plans are in line with the overall vision of the country as a reference for sectoral plans and programmes.

Phases of budgeting process

Federal budgeting process consists of several phases, namely: planning, preparation, budgeting, review, approval and execution as explained in the chart below.

Phases of budgeting process

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Budget cycle

The federal budget follows a medium-term budget cycle. The budget cycle must match the strategy cycle of the federal budget. A budget is drawn up for each year within the fiscal period, before the start of the period, and is updated annually within the budget cycle. This principle ensures that the long-term government strategy is reflected in the budget on a consistent basis. The federal budget cycle was developed from a three-year to a five-year budget cycle.

Budget development

In the last 49 years, the UAE’s budget has increased more than 291-fold from AED 200 million in 1972 to AED 58.3 billion in 2021. This has been accomplished through optimal distribution, efficient use of resources, and maintaining a balance between revenue and expenditures.

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