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 decree of Federal Law No 8 of 2011 concerning the Rules for Preparation of the General Budget and Final Accounts, a separate budget for federal service authorities may be earmarked and submitted to Ministry of Finance (Move) for approval within budget law. 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 4 and 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.
Participatory budgeting while engaging the society
In September 2020, the UAE Government launched a major public eParticipation project titled ‘Designing the Next 50’. This project aimed to engage all segments of the society: public and private sectors, and citizens and residents in designing the next 50 years of the UAE. The UAE launched a digital platform, UAENext50, to gather ideas from citizens and residents. Society members are expected to provide their ideas for national projects, which will be accommodated in the national budget.
Ministry of Finance will complete its procedures for preparing the general budget in line with the strategic objectives to achieve the UAE’s vision on preparation for the next 50 years
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:
Based on the general strategic objectives of the federal government (UAE Vision 2021), 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.
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. Refer to the reports on budget execution.
The UAE's budget increased more than 242-fold in 44 years, from AED 200 million in 1972 to AED 48.557 billion in 2016. Read more about the UAE’s federal budget development over the years.
Updated on 14 Oct 2021