UAE FISCAL TRANSPARENCY

UNCLAS ABU DHABI 000334

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR EEB/IFD/OMA, NEA/ARP

E.O. 12958: N/A
TAGS: EAID ECON PREL AE
SUBJECT: UAE FISCAL TRANSPARENCY

REF: STATE 16737


1. (SBU) UAE fiscal data is often incomplete. This is partially due
to the federal nature of the country, in which each emirate has its
own budget and federal-emirate level coordination on fiscal matters
has historically been limited. The Federal Budget is published
annually in newspapers and provided to the UAE's Federal National
Council. Federal expenditures, however, only make up about 22% of
consolidated UAE expenditures and do not include significant
financial outlays by the Emirate of Abu Dhabi on behalf of the UAE
as a whole, including defense expenditures.


2. (U) The Ministry of Finance compiles data for the federal
government only. The UAE provides the IMF with separate fiscal data
on the Federal budget and on the budgets of three emirates (Abu
Dhabi, Dubai, and Sharjah) for the annual Article IV consultation
mission to provide a consolidated fiscal position for the UAE.
These budgets are also published in the annual statistical
supplement to the Article IV. The UAE Central Bank publishes an
annual "consolidated" budget for the UAE, which omits certain budget
items, such as investment income.


3. (U) According to Federal Law Number 23 (2005) "Regarding the
General Budget and the Final Accounts Preparation Rules," the
Federal Government's budget is prepared on an annual basis and shall
be submitted to the UAE's "Federal National Council for approval and
comments at least two months before the beginning of the financial
year." The federal budget is published in UAE papers at that time.
The Emirate of Dubai has also published its budget, albeit at a high
level of abstraction. The Emirate of Abu Dhabi does not publish its
budget, but does provide budget data to the IMF. As part of the
process leading up to the Emirate of Abu Dhabi's issuance of a one
billion dollar "benchmark" bond, it provided fiscal data to the main
rating agencies, some of which is published in the agencies' rating
reports.


4. (U) The IMF notes that "while data provision to the Fund is
adequate for overall surveillance purposes, data shortcomings affect
staff's analysis." These shortcomings result from a number of
factors including a shortage of trained staff and poor information
flows between federal and emirate-level governments and public
sector entities. The IMF has provided technical assistance on
public expenditure management. The UAE has moved to address some of
these issues and fiscal transparency has improved over the past
several years.


5. (U) There are no U.S. Government programs in the UAE that promote
accurate disclosure of revenues and expenditures in the UAE federal
budget.

Quinn