UAE's Economic Vision 2030, a robust capital spending plan on education, healthcare, industry, tourism, infrastructure, and renewable energy projects, generated Millennium Development Goals (MDG) progress and put the country on track towards reaching most of the MDGs on time, according to the annual report of the Opec Fund for International Development (OFID) for 2014.
The report, issued yesterday, said the UAE's GDP in 2014 was supported mainly by its perceived safe-haven status amid regional instability, its tourism and hospitality sectors, and a rebounding real estate sector.
'The sovereign wealth fund buffers help the country to enjoy lower fiscal breakeven oil prices, allowing it to continue on its path of gradual fiscal consolidation. The current account surplus narrowed due to lower oil prices but remained at a healthy level of 11.1% of GDP. The banking system continued to be well-capitalised and the rate of non-performing loans declined,' the report noted.
In the report's forward, Suleiman Jasir Al-Herbish, OFID Director-General, said,' By the end of 2014, cumulative commitments had climbed to almost US$18bn, following a record US$1,553m in approvals during the year. Disbursements also hit a new high of US$1,331m. These figures are not only immensely satisfying in themselves but also a powerful testament to the success of our various restructuring programs and our desire to do more.' 'Operations throughout 2014 continued to be led by our strategic focus on the vitally important water-food-energy nexus. With the global population expected to reach nine billion by 2050, these three areas sustainable water access, modern energy access and food security represent the defining challenges of this century.' OFID, he added, has made clear its readiness to mobilise all means at its disposal to address these issues and, in 2014, allocated US$823m or 53% of total approvals to nexus-related initiatives. Within the nexus, support to the agriculture sector leapt to four times the sum committed in 2013, bringing it close to par with the water and sanitation sector. Predictably, however, it was the energy sector that drew the bulk of approvals, with a record US$456m given in support of 29 projects in 24 partner countries.
'In keeping with our Energy for the Poor initiative and the spirit of our 2012 Ministerial Declaration on Energy Poverty, all financing mechanisms were brought into play to facilitate the broadest possible range of solutions.
Of particular note was the increased share going to renewables, particularly through the private sector window, whose 2014 portfolio was heavily pro-renewables and included, among other ground-breaking projects, two prize-winning solar installations in Jordan. Renewable solutions also featured strongly in the record US$5.9m approved under the grant-financed energy poverty program.' Among all the financing windows, the public sector maintained its position as the central pillar of OFID's operations, drawing 65% of total commitments for the year. The funds supported 41 projects in 34 countries and included a maiden public sector project in Argentina.
'Resources channelled through the grant program totalled US$25m and helped support over 60 initiatives, the majority of them at community level. Although they represent just a fraction of our commitments, we consider grant financed projects to represent the very essence of our mission. Efficient and quick at delivering results, they are in their own right an important instrument of development. In 2014 alone, in addition to the new funding, we were able to successfully complete 67 previously approved grant-financed projects benefiting 50 countries,' he concluded.
According to the report, the social and economic performance of OFID Member Countries in 20141 continued to be influenced by the international oil market, as well as the slow recovery of the world economy and, to some extent, by other socio-political issues.
Despite growing by 3.3% in 2014, the world economy continued to address the legacy of the global financial crisis, including debt overhangs and high unemployment. The volume of world trade contracted to 3.1%, from 3.4% in 2013, largely as a result of the deceleration in global activity, slower expansion in Latin America, a sharper first quarter inventory correction in the United States, as well as the impact of the Ukrainian conflict in Russia and neighbouring countries. Advanced economies grew at 1.8%, up from 1.3% in 2013, mainly due to better performance from the USA, the UK and Germany. Emerging and developing economies on the other hand did not fare as well, with GDP dropping three percentage points to 4.4%.
OPEC continued to contribute to the world oil supply by producing 30 million barrels per day (mb/d) in 2014, a decline of 167,000 barrels per day from 2013. World oil demand increased by 1 mb/d in 2014 to 91.2 mb/d, where the incremental demand was met by non-OPEC supply. Oil prices took a nosedive in the second half of 2014, going from US$100 per barrel in June to just over US$50 per barrel at the end of the year. This was partly as a result of new oil sources from North America increasing the global supply, OPEC's November decision to maintain current output, and a general slowing of oil demand in China and other developed countries because of the uncertain economy. The oversupplied market led the commercial OECD oil stock to reach around 100 million barrels higher than the latest five-year average in November 2014. The value of the OPEC reference basket of selected crudes averaged US$96.29 per barrel in 2014, a decline of US$9.58 from the previous year.
OFID Member Country governments remain committed to making further headway towards sustainable, inclusive, and diversified growth and improving social outcomes, including achievement of the MDGs. Although the plunge in oil revenues has confronted economies with constraints, positive growth rates, increased fiscal spending, and new pledges of financial assistance have had positive spillover effects. For example, trade and financial linkages, including demand for imports, outward remittance and foreign direct investment, have had a constructive impact at both the regional and global levels.