Hamdan bin Rashid issues financial circular

In line with preparing the draft of the federal budget for the fiscal year 2018, which covers the second year in the five-year plan for 2017-2021, H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance (MoF), issued the financial circular No. (1) of 2017 concerning the preparation of the draft of the federal budget for the fiscal year 2018.

The five-year budget plan for 2017-2021 was prepared for ministries and independent federal entities in line with UAE Vision 2021 and the UAE Cabinet’s resolution No. 7/168 and /6 of 2015. The resolution extended the term of the federal budget from three years to five years (2017-2021), taking into consideration the annual updates on plans.

H.H. Sheikh Hamdan stressed the importance of adopting the zero-based budgeting system while preparing the draft of the federal budget and to work as per the rules and regulations of the consolidated financial procedures manual.

"By implementing the principles of the zero-based budgeting system, the ministry aims to recalculate the costs of activities and programmes of federal government entities to reach the actual cost of the required services without over-spending. This aims to create comparisons of similar services between various government entities, private sectors and other entities, and requires to identify the activities and services related to the agreed objectives; identify the necessity of activities and services and thoroughly analyse the cost and set the priorities based on the analysis of the cost and benefits according to their contribution in achieving the objectives," he said.

Sheikh Hamdan highlighted that the ministry has provided the guidelines to prepare budget drafts for all federal entities on its website. This aims to enhance the government’s financial performance, develop effective mechanisms to prepare and implement the UAE’s budget and enhance the financial budget planning mechanisms according to the Ministry’s vision.

He also stated that the budget draft for the fiscal year 2018 will be prepared to develop and accomplish optimal use of the government’s financial resources to achieve happiness and positivity in society, enhance the sustainable allocation of resources, and provide best educational, health and societal services for Emiratis and residents of the UAE.

Sheikh Hamdan highlighted that MoF seeks to achieve its strategic objective which includes highest returns on financial resources, providing transparent reports, and ensuring the implementation of ministry's message to use the federal government’s resources through effective financial management and adopting sound financial policies.

"This comes as part of implementing the government’s strategy launched by Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, which stresses on developing the federal government’s management, adopting sound financial policies and procedures, enhancing income services and receiving customer satisfaction.

"The strategy focusses on the national economy’s strength and its ability to increase economic growth and investments through attracting capitals, contributing to drive sustainable development and the wise leadership’s commitment to provide the best services for Emiratis and residents," he added.

Sheikh Hamdan highlighted the key financial instructions to prepare the budget draft for the fiscal year 2018, including preparing and studying government entities’ estimated revenues and expenditures in line with the issued laws, decrees and decisions; rationalising and controlling expenditures without affecting the ability of government entities to implement and achieve its goals and programmes; working on the preparation of a development budget which encourages expenditure on productive investment; preparing the draft of the federal budget according to the best international practices and using the latest automated systems to prepare the draft of the budget.

Sheikh Hamdan stressed the country’s significant achievements and highlighted that the UAE ranked first in the Arab world and 24th globally out of 176 countries in the transparency index in 2016. "UAE scores 66 points in the index reported by Transparency International and tops other countries including Spain, Malaysia and Georgia," he said.

Younis Haji Al Khoori, Under-Secretary of MoF stressed the need to adhere to the rules and regulations specified by the financial circular during his meetings with experts in federal entities. He pointed out the ministry’s readiness to receive any feedback and suggestions for improvement, which will be taken into consideration when preparing the ministry’s development projects related to the financial systems.

He clarified the need to refer to the 2016 Consolidated Financial Procedures Manual when preparing for the draft federal budget and the model structure and tables to be contained in draft budgetary plans, as well as the related laws and regulations. "The manual is a fundamental reference when preparing for the draft federal budget, according to the principles of zero-based budgeting system, and was introduced in 2011," he said.

Al Khoori stressed the ministry’s readiness in providing technical support and responding to all inquiries by federal entities. The financial circular specified 20/04/2017 as the fixed deadline for submitting a draft budget to MoF.

The ministry will continue to develop the procedures for preparing the draft budget with the help of specialised team, he added.