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Federal Budget Framework and Steps

Systematically created for the UAE’s social and economic development
Introducing the general budget

The general budget is the financial programme of the federal government used to achieve economic and social development. This is accomplished through the optimal distribution and efficient use of resources within the framework of the federal strategy on the expected spending by federal authorities during the coming fiscal year*, provided that income and expenditure are balanced.

According to the decree of Federal Law No 8 of 2011, a separate budget for federal service authorities may be earmarked, and submitted to MoF for approval within budget law. Also, all federal authorities may - by virtue of a Cabinet resolution - be assigned to prepare a draft medium-term budget. The Cabinet resolution shall determine the budget's terms in years provided that it includes annual estimates for both income and expenditure as approved by the Cabinet.

The steps of issuing the budget law

The Minister of Finance issues a circular that specifies the necessary steps for the preparation of next year’s draft budget during the third month of the present fiscal year. Such a circular shall include budget cap, approved strategic objectives, indicators, revenue forecast and the fixed deadline for submitting a draft budget to MoF. The minister shall issue another circular on closure of accounts and preparing the final account of the previous fiscal year.

Each federal authority determines its Programmes, plans and Key Performance Indicators (KPIs) according to the strategic plan approved by the Cabinet within the budget cap. All authorities must also submit their initial forecasts for revenue and expenses allocated to chapters, line items, Programmes and activities agreed upon, along with performance measures and efficiency indicators according to the circular issued by the minister, which specifies submission deadline.

* The fiscal year is composed of 12 months, starting from 1st January and ending on 31st December of each year.


Federal Budget Issuing Steps


 
Federal Budget Issuing Steps  
 
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Federal Budgeting Process


 

The budgeting process is initiated by release of the financial circular on preparation of the draft budget for the next fiscal year. This financial circular is issued in accordance with the law, and based on the UAE Cabinet’s Resolution No 1/181 of 2008, which mandates all the ministries and federal authorities to:

 
 
Federal Budgeting Process​  
 
 
 

Based on the general strategic objectives of the federal government (UAE Vision 2021), all ministries and federal authorities prepare plans for their annual budgets, under the supervision of the Ministry of Cabinet Affairs. This is to ensure that these plans are in line with the overall vision of the country as a reference for sectoral plans and Programme​s.

During the budgeting process, MoF provides technical support to all ministries and authorities to ensure their readiness and ability to carry out their tasks. It cooperates with ministries and federal authorities to determine the main and complementary services and activities of such entities along with their cost, starting from zero point to the actual cost, then adding this cost within the approved automated systems.

 
 
System's objectives  
 
 
To download Budgeting Process infograph, click here
 

Budget Allocations

In each annual budget, revenues, expenses and allocations are to be determined on the basis of the following budget sectors:

 
Budget Allocations

*The social development sector includes public, university and higher education services, health, pension fund (pensioners), social assistances, marriage fund grants, Sheikh Zayed Housing Programme grants, and other services.

 
To download Budgeting Allocations infograph, click here
 

Phases of Budgeting Process

Federal budgeting process consists of several phases, namely: planning, preparation, budgeting, review, approval and execution.

 
>Phases of Budgeting Process  
 
 
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Zero-Based Budgeting

Zero-Based Budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. ZBB is conducted at regular intervals and starts from a "zero base", analysing every function within an organisation regarding its needs and costs. Budgets – within the limits of budget caps – are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one. It provides bottom-up costing for performed activities. The budget is based on the costing and prioritisation of activities, as well as the optimal use of resources. ZBB has been applied since the budget cycle 2011-2013

Budget Cycle

The Federal Budget follows a medium-term budget cycle. The budget cycle must match the strategy cycle of the Federal Budget​. A budget is drawn up for each year within the fiscal period, before the start of the period, and is updated annually within the budget cycle. This principle ensures that the long-term government strategy is reflected in the budget on a consistent basis. The federal budget cycle was developed from a three-year to a five-year budget cycle.

 

Six Best Practices
Applied in the Federal Budget


six major elements that all comply with international best practices and increase transparency and efficiency. These elements can be grouped under the following  ​

 
 
To download Six elements to applying best practices infograph, click here ​​​​
 

Page last updated : 24/04/2018 12:57 PM