18348
UAE Faces First Fiscal Deficit
World Economy

UAE Faces First Fiscal Deficit

The UAE is set to post its first fiscal deficit since 2009 because of lower oil revenues, but it can avoid any serious economic slowdown, the International Monetary Fund said after annual consultations with the local authorities.
The UAE’s consolidated fiscal balance is expected to swing to a deficit of 2.3 percent of gross domestic product in 2015 from a five percent surplus last year, the IMF said.
Zeine Zeidane, who led the IMF mission, told Reuters the deficit posed no threat to the economy. He estimated that at today’s oil prices, the UAE could keep spending at current levels for at least 30-40 years, drawing on its ample financial reserves. Brent crude is currently around $63 a barrel.
But he said UAE authorities were considering ways to consolidate spending as a matter of prudence. The IMF predicts a 2.2 percent fiscal surplus next year. “It would be a very gradual fiscal consolidation, with no significant impact on economic growth,” Zeidane said.
The IMF is urging the UAE to consider slowing growth in current spending – expenditure in areas such as wages and raw materials – while expanding its revenue base with new taxes.
One option would be to introduce a value-added tax, which Persian Gulf nations have been discussing. Zeidane said it would probably have to be adopted region-wide to avoid smuggling and distortions to individual countries’ economies.
He also said the fund had suggested to the UAE that it consider introducing excise taxes and a uniform corporate tax for both local and foreign companies. At present there is little corporate taxation outside the oil sector, apart from a 20 percent levy on foreign banks in Dubai.
A UAE corporate tax could be introduced at a lower rate, initially to accustom the government to running a national tax system, Zeidane suggested. He declined to say how likely the government was to impose such a tax.
The IMF predicts GDP growth will slip to three percent this year from 4.6 percent in 2014, but edge up to 3.1 percent next year.

Short URL : http://goo.gl/wYoKZB

You can also read ...

Mexico Hosts 39 Million Tourists, Earns $21 Billion
Mexico saw record revenues from international tourism in 2017...
US has accused ABLV of money laundering and breaching  sanctions on North Korea.
The European Central Bank said Saturday it has determined that...
Debt to GDP ratios across the OECD averaged 73% last year and its members are set to borrow $14.67 trillion from the markets this year.
The world economy is at risk from a rising tide of government...
S&P Ups Russia to Investment Grade
Russia received a long-awaited upgrade to its sovereign rating...
Peru Deficit Narrows
Peru had a current account deficit of 1.3% of the gross...
China’s Geely Buys $9 Billion Daimler Stake
The founder of Zhejiang Geely Holding Group Co. has...
Manafort Indictment Spells Trouble for Bankers
Recently filed federal charges against President Donald Trump’...
Thorny issues such as content rules for  cars remain unsolved.
It’s looking increasingly likely Nafta talks will extend...

Trending

Googleplus