Spending freeze on UAE universities for 2011

The Federal Government will run a Dh3 billion budget deficit next year and will freeze spending by state universities.

ABU DHABI // The Federal Government will run a Dh3 billion budget deficit next year and will freeze spending by state universities.

Federal spending is projected to be Dh41bn in 2011, with revenues at a little over Dh38bn, according to figures provided by the Cabinet and released yesterday at the FNC.

The overall federal budget for 2010 was Dh43.6bn, representing a six per cent cut.

A breakdown of the budget by ministry and federal authority provides an insight into the nation's financial strategy for the coming year.

It also offers a glimpse into the revenues of the Federal Government. The Abu Dhabi Government remains the second-biggest contributor after the Ministry of Finance, but the capital's funding has declined.

Funding for federal universities has been frozen at 2010 levels, despite concern over their finances and requests from them to increase their budgets.

The budget will be debated at an FNC session on December 28.

For the first time the UAE has used the so-called "zero-based" budget, which officials hope will reduce waste. Under this system, every expense by a ministry has to be justified before any funds are allocated.

The budget will be constant for three years, meaning that measures including the freeze on federal universities are likely to stay in place until 2013.

United Arab Emirates University's budget will remain at Dh1.3 billion, and that of Zayed University at Dh321 million. The Higher Colleges of Technology, where financial troubles were the subject of an FNC report this year, had its budget frozen at a little over Dh735 million.

Sheikh Nahyan bin Mubarak, chancellor of the HCT and Minister of Higher Education, told the FNC last month the university's budget was the root of its hardships.

The budget of the Federal Electricity and Water Authority, which provides utilities to the northern Emirates, was cut to Dh5.bn, despite frequent complaints of water and electricity shortages there.

The ministries are not allowed to ask for more money this year unless they can fund it from their own revenues, according to the Cabinet's budget resolution.

The federal budget does not include some significant sources of revenue and spending. Armed Forces spending is excluded, as are oil revenues, because the Constitution enshrines the right of each emirate to manage its own natural resources.

Abu Dhabi's contribution to the federal budget will decline from more than Dh14 billion in 2010 to Dh11.6bn in 2011. Dubai's contribution remains steady at Dh1.2bn. The rest of the projected 2011 revenue will come from services provided by the ministries.

Nevertheless, Abu Dhabi remains one of the main guarantors of services to the other emirates. "Without Abu Dhabi, half these emirates would have no electricity," said Abdul Raheem al Shaheen, an FNC member from Ras al Khaimah.

The largest source of revenue for 2011 is the Ministry of Finance, with a projected Dh16bn. That figure is believed to include the telecom provider Etisalat's contribution. The Ministries of Interior (Dh3.4bn) and Labour (Dh3.7bn) are next.

Younis al Khouri, the finance ministry's director general, said the deficit was very minor but that the country was considering alternatives.

The main recipients of funding are the Defence and Interior Ministries, at a little over Dh6bn each.

Federal spending on infrastructure projects and "economic resources", which incorporates the Ministries of Economy, Foreign Trade, Energy and Public Works, is more than Dh1.6bn.

The Ministry of Education will be one of the biggest recipients of funding, at Dh4.6bn. Health and Social Affairs ministries receive just over Dh2.5bn each.

Spending on social development, which includes all education spending, social benefits, health, labour, the Marriage Fund, the Zayed Housing Programme and charitable bodies such as the Red Crescent Authority, will reach Dh15bn, about 36 per cent of federal spending.

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This story has been corrected since its original publication. We stated that The Higher Colleges of Technology, where financial troubles were the subject of an FNC report this year, had its budget frozen at a little over Dh73 million. The figure in fact is Dh735 million.