While oil-exporting countries face significant challenges as result of global economic turbulences and falling oil prices, the UAE continues to achieve new levels of economic growth.
This comes as a direct result of the UAE wise leadership’s forward-looking vision and its precise predictions of the region’s developments-which contribute in facing growing global economic challenges, through developing and putting in place prudent financial policies and sound economic methodology that promotes sustainable economic growth.
This economic growth did not come as a surprise to experts and analysts. The economic diversification policies adopted by the UAE in the early eighties, laid down by the late Sheikh Zayed bin Sultan Al Nahyan and guided by President His Highness Sheikh Khalifa bin Zayed Al Nahyan, play an essential role in strengthening income sources and building a national, knowledge-based economy founded on a spirit of creativity and innovation with deep knowledge on global economic challenges.
The International Monetary Fund praised the vision of the UAE wise leadership and the fiscal policies adopted by the Ministry of Finance.
H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, stressed the country’s relentless pursuit of development and prosperity for its people and residents. "The diversified financial and economic policies put in place displayed the country’s high ability to cope with the oil exports challenges, debt issue coverage on an external and local level at good cost, as a result of adopting proactive steps in market liberalisation and deregulation, thereby opening up the banking sector to domestic and foreign financial institutions. In fact, this raised the efficiency of the financial system and rates of domestic reserves, and has contributed to the growth of capital markets and the continuous investment for major infrastructure projects."
Sheikh Hamdan bin Rashid said, "The UAE continues to gradually restructure its financial system through enhancing financial reserves and developing policies to maintain financial and monetary stability and push sustainable economic growth, as well as policy reforms in removing oil dependency and laying foundations in implementing VAT. The UAE has an important status as active player in economic diversification. Despite being the sixth largest oil exporter, the revenues of this sector amounts to 30 percent of the total financial resources of the country; where the economic and financial indicators confirm unprecedented growth in other sectors".
Sheikh Hamdan bin Rashid added, "The decline in oil prices is part of the global economic cycle. The oil-producing countries faced similar cases in the mid-eighties, which the UAE overcame thanks to its lead in setting the right methodology, managing resources and controlling costs. This phase is a continuous part of the economic cycle which I trust the country will overcome due to its proper planning, spending restraints frameworks, financial adaptation and creating sustainable government revenues by depending on alternative oil resources".
The UAE’s leading sustainable journey received great interest and appreciation on different regional and international levels.
During her visit to the UAE in February, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), highlighted the wise fiscal policies adopted by the country; that enhanced its competitiveness and made bank assets, owned by the local banking sectors, the largest of its kind in the region making the UAE the second largest economy in the region and 17th globally according to the World Economic Forum (WEF) indicators.
Christine Lagarde highlighted the leading role of the UAE’s wise leadership in managing the process of growth and development. The goal is for the UAE to become one the most competitive economies in the world by 2021 with the implementation of diverse economic policies and by encouraging the growth of the industrial and non-oil sectors as alternatives to oil. The efforts exerted by different governments resulted in the UAE’s non-oil exports exceeding the aggregate of other GCC countries.
"Our discussions with the Ministry of Finance and UAE government entities touched on a profound awareness to economic challenges and the continuous pursuit to adopt and implement gradual fiscal consolidation through raising non-oil revenues, phasing out other energy subsidies, implementing the tax system next year and providing foreign investment data to strengthen financial stability, and improve statistics and transparency, notably the collection and publication of data on the International Investment Position, and to implement further structural reforms to foster productivity and competitiveness in international forums," Christine Lagarde was quoted by a press release from the Ministry of Finance as saying.
Dr. Hazem Al Beblawi, Member of the Executive Board of the IMF, praised the comprehensive development methodology adopted by UAE in local economic diversification to be one of the top countries in the region.
Al Beblawi said, "The decrease in oil revenues paved the way to implement VAT on a regional level, and UAE had qualitative steps in this field. Aside from implementing economic diversification policies, decreasing oil dependency and strengthening and supporting innovative projects, the Ministry announced the beginning of VAT implementation in the coming years; to be, as witnessed, a pioneer in implementing and adopting fiscal and monetary reforms in the regional and international level".
Obaid Humaid Al Tayer, UAE Minister of State for Financial Affairs, said, "The decline in oil prices is considered a great opportunity to restructure the economy and stimulate more economic diversification factors, encourage production and industrial sectors to enhance its contribution in the GDP of the UAE. MoF is implementing a long-term strategy with clear objectives to develop a suitable environment for expanding the productive base and industrial sector, enhancing reliance on non-oil sectors, boosting investment in infrastructure and supporting foreign trade. This will in turn support economic integration and the growth of the UAE’s economy".
Younis Haji Al Khoori, Undersecretary of MoF, said, "The Ministry established a solid platform that is based on specific standards and policies in the management of government financial work, which enabled it to study macroeconomics and develop effective financial forecasting to improve quality standards and fiscal policies. The Ministry has a task of providing and managing financial resources for the Federal budget without deficits. The Ministry also continues to support innovative projects in different fields and to implement best international standards in managing government financial resources; in order to achieve local economic stability and sustainability".
Khalid Ali Al Bustani, Assistant Undersecretary for International Financial Relations at MoF, said, "The Ministry seeks to strengthen the UAE’s international network with different countries and regional and international financial entities with whom we share goals and visions for discussing best ways to diversify income resources and develop innovative solutions to face challenges in the next phase; in order to control expenditures, increase revenues and develop financial and tax reformation programs and systems aimed to enhance international financial stability and achieve sustainable economic development".
A specialised IMF delegation conducts annual visits to the UAE within the framework of article IV discussions. These visits aim to evaluate financial, monetary and economic sectors. A report is issued with essential economic developments and statistical reports on an annual basis. The Fund’s report, issued in October 2015, highlighted UAE ability to achieve growth twice more than the economic growth in the Euro-zone at this time. It also underlined that the UAE is steadily moving towards the path of growth and prosperity, leaning on fiscal and monetary stability elements led by MoF, as well as its commitment to enhance the country’s position in the region and the world.