DUBAI: The United Arab Emirates federal government will increase public spending by 3.4 per cent next year despite the global economic downturn, according to the draft 2010 federal budget released on Monday.

Spending will rise to 43.63 billion dirhams ($11.89 billion) for the fiscal year 2010, but the government expects revenues to match expenditure and to balance the budget, making it the sixth consecutive year without a deficit.

The social services sectors, including education and health care, receive the lion’s share of the budget, equivalent to 41 per cent or 17.8 billion dirhams ($4.85 billion). The budget of the federation of seven emirates, Abu Dhabi, Dubai, Sharjah, Ajman, Ras al-Khaimah, Umm al-Qaiwain and Fujairah, reflects “the sound fiscal policy of the government through which it was able to achieve positive growth and no deficit despite the global economic circumstances”, WAM said.

Like its neighbours in the Gulf region, the UAE has witnessed a six-year oil-fuelled economic boom. However, the onset of the global downturn triggered a slowdown in the economy, especially in the emirate of Dubai’s real estate market, causing suspension of mega construction projects and job layoffs as property prices plunged by 50 per cent.

In addition to the federal budget, each of the seven emirates adopts its own budget, which is much higher than that of the federal government. With reserves estimated at 97.8bn barrels of crude oil, the UAE is a leading OPEC member.

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