The United Arab Emirates Case of Economic Success

Figure 27. United Arab Emirates Government Expenditures from 1998 to 2014 
Source: Trading Economics, 2016c 

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As figure 27 illustrates, the nominal values of the UAE’s government expenditure 
stabilized throughout 2004 to 2007, which implies that the new fiscal system 
adopted in 2000 was producing results in slowing the growth of public spending. 
Although in 2010 the federal government was able to reduce public spending, 
from 2008 until 2014 the nominal values of government expenditures have in fact 
increased considerably. 
Figure 28. United Arab Emirates Government Budget (% of GDP) from 1998 to 2014 
Source: Trading Economics, 2016a 
Nonetheless, as «…a result of the prudent management of public revenue, the 
public deficit…» declined from 17,7% of GDP from 2009 to 3,1% in 2010, reaching 
a public surplus of 4,1 % of GDP in 2011 as depicted above in figure 28 (WTO, 
2012). It is also important to note that, again, the increase in oil prices and, thus 
in oil revenues, contributed largely for the occurrence of fluctuations in the 
government’s budget. 
In addition to fiscal policies towards the management of public expenditures, the 
UAE government has also adopted highly attractive policies in the field of 
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UAE Government Budget (% of GDP) - 1998 to 2014

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income taxation that have contributed largely to foster both foreign investment 
and the private sector. As the Emirati authorities reported to the WTO (2006a): 
«The UAE maintains the belief that income tax exemptions encourage an increase in FDI and 
a more vibrant private sector development. All free zones therefore benefit from zero income 
tax. Moreover, the UAE believes that a balanced public budget is conducive to economic 
growth in the long run.»
The above statement clearly demonstrates the linkages between the UAE’s fiscal 
policies with the remaining policy fields, such as investment and trade policies 
that are mainly directed towards the private sector, the attraction of foreign 
investment and the development of commercial exchanges between countries. 
For this matter, it is possible to note that the UAE’s fiscal policies have been 
enablers of the general strategic objectives of the government’s economic policy 
(Omaira, 2001).