Ministry of Finance Issues Financial Circular on Preparation of Draft General Budget of the Federation for Fiscal Year 2021

His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, issued the financial circular No. (3) for 2020 on the preparation of the draft general budget for the federation for fiscal year 2021. This is the fifth year of the five-year plan spanning 2017-2021, and the circular set 19 April 2020 as the deadline for submission of the 2021 draft budgets to the Ministry of Finance (MoF).

The circular is in line with the ministry’s strategic objectives to bolster the government’s financial planning, budget implementation, increase efficiency, as well as to manage the government’s finances and cash flow.

H.H. Sheikh Hamdan bin Rashid Al Maktoum noted that the guidance of the UAE’s wise leadership laid out the road map for a robust foundation for government action, advancing the country's march towards sustainable progress, while directing financial resources for societal prosperity and happiness.

H.H. said: “The Ministry of Finance is preparing the draft budget, in accordance with international best practices, and in a manner that optimises the use of government financial resources. This ensures the improvement of government services; including provision of high-quality education, health and social services to achieve prosperity.”

H.H. also stated that MoF’s website lists all the information needed to help guide federal government entities when preparing their draft budget. The ministry supports entities to improve government financial performance, financial planning, and to effectively prepare the general federal budget in line with the ministry’s vision.

H.H. affirmed the ministry’s commitment to the government strategy, launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to develop the federal government administration, follow rational financial policies, increase income sources, and ensure customer satisfaction.

H.H. said: “By adopting the best principles of effective financial management, and designing and implementing rational financial policies, the Ministry of Finance makes every effort to achieve the highest return on financial resources, as well as to provide transparent reports that optimise federal government resources.” 

The 2020 fiscal budget reinforces the success of the ministry’s operations, and is estimated at a total of AED 61.35 billion, against estimated expenditures around the same value without deficit for third year in a row.

Community development and pension programs accounted for 38% of the total budget. This was to cater for the well-being, and to provide a decent life for the UAE’s society. A further 14.8% was allocated towards upgrading the education system.

The health sector accounted for 6.9% of the total budget, while 2.5% of the total budget was allocated to the Sheikh Zayed Housing Programme. Allocations for government affairs amount to 32.6% and are based on managing national facilities and providing the highest level of government services to society.

The experts at Ministry of Finance continues to provide training on the procedures of updating the budget project to all federal entities that seek assistance. In February 2020, the ministry held a series of workshops on developing automated systems to prepare the draft budget, and continue linking electronic processes to the government systems, where the electronic link between the automated budget preparation system and the financial system of the federal government has been completed.

The Ministry of Finance developed a system to implement promotions (financial and employment), as well as amendments to the job budget during the budget execution year, to enhance the efficiency of preparing the general budget and to facilitate procedures related to the job budget. An intermediary account was created for amendments to the job budget, which the ministry also explained and clarified to the federal authority users of the budget automated system in the workshops held in February 2020.

The budget automation system for the federal authorities is distinguished by its contribution to the reduction in the amount of procedures received from the federal authorities, such as the reduction and creation of jobs, the reduction of the number of financial transfers resulting from financial settlements in payroll items, as well as flexibility in the procedures for employee promotions, based on the results of the employee’s performance evaluation.

Additionally, it calculates the savings resulting from not using financial allocations for promotions at federal government level, reducing time and effort and making the necessary decisions in a timely manner to implement the financial procedures at a targeted pace.

Several workshops to train specialists to prepare the draft budget were held with the federal authorities at the beginning of March 2020. MoF’s website provides the specialists in federal authorities with the required information to guide them through the process. The ministry responds to all inquiries through its call centre on 600533336 or via email on info@mof.gov.ae.