IMF: UAE healthies economy in the GulfStaff writer ▼ |
But the possibility of another boom-and-bust cycle in debt-laden Dubai is a risk for the UAE economy in the medium term, the IMF warned after the state announced a string of huge real estate development projects.
The IMF's report, released after annual consultations with the UAE, indicated the country is doing more than other Gulf Arab oil exporters to rein in growth of government spending and reduce its vulnerability to any steep fall of the oil price.
Hit by the global financial slump, Gulf Arab countries boosted spending sharply from 2009, and increased it further in the wake of the Arab Spring uprisings of 2011. The higher spending has succeeded in keeping economies growing, but means state budgets could fall into deficit if oil prices slide.
The UAE began curbing its spending last year, more than doubling its total fiscal surplus, the combined surplus of the federal government and all of the UAE's seven emirates,to 8.8 percent of gross domestic product from 4.1 percent in 2011.
This lowered the oil price which the UAE needs to balance its combined budget to $74 per barrel last year from $84 in 2011. ■