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The UAE’s federal budget has witnessed a 358-fold increase, from AED 200 million in 1972 to AED 71.5 billion in 2025. This progress has been driven by optimal distribution of funds, efficient allocation of resources, and maintaining a balance between revenues and expenditures.
The growth in budget allocations has focussed on developing infrastructure, improving the quality of education and health services in the UAE, and enhancing the performance of all sectors that serve the UAE citizens and residents.
The Ministry of Finance (MoF) transitioned from the “Line Item Budget” in 1972 to “Programme and Performance-based Budgeting” in 2001. A medium-term (three-year) budgeting system was introduced in 2008, followed by the adoption of a medium-term zero-based budgeting in 2011. In 2014, COFOG (Classification of the Functions of Government) and an automated system were implemented which culminated in the adoption of a five-year zero-based budgeting system for the term 2022-2026.
The implementation of the Zero-Based Budgeting System highlights the Ministry’s commitment to efficiency by meticulously evaluating the cost of each activity, ensuring that funds are allocated according to actual priorities and preventing resource mismanagement.
Furthermore, the adoption of a functional classification and automated system since 2014 has significantly improved transparency and accuracy, enhancing the Ministry’s ability to monitor performance and identify areas for improvement.
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. This circular includes the budget cap, approved strategic goals, key performance indicators, revenue forecasts, and the deadline for submitting the draft budget to the Ministry of Finance. The Minister also issues a separate circular that provides guidance on closing the accounts and preparing the final financial statements for the previous fiscal year.
The fiscal year comprises 12 months, starting from January 1 and ending on December 31 of each year.
The Minister of Finance issues a circular specifying the steps for preparing next year’s draft budget; and another circular on preparing the final account of the previous fiscal year.
Each federal authority determines its programmes, plans, and key performance indicators, as well as their initial forecasts for revenue and expenses, and submit them to MoF.
MoF prepares an annual draft budget law, and a draft resolution of the medium-term plan, and submits both to the UAE Cabinet.
The UAE Cabinet discusses and prepares both drafts for final approval. It then submits the draft law for the federal budget and the autonomous budgets to the Federal National Council (FNC).
The FNC discusses and provides its feedback on the draft and submits it to the Federal Supreme Council (FSC) for approval.
The FSC reviews the draft law along with the FNC’s feedback and notifies MoF on the readiness of the budget law.
The budget law is submitted to MoF which, in turn, informs all federal authorities about their allocations.
According to the Federal Decretal Law No. (26) of 2019 on Public Finance, 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.
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, and activities, along with performance measures and efficiency indicators according to the circular, which specifies submission deadline. The fiscal year starts from January 1 and ends on December 31.
Throughout the process, MoF provides technical support and collaborates with all federal entities to determine their main and complementary services and activities, along with the costs, starting from zero to the actual value, then adding this within the approved automated systems.
In each annual budget, revenues, expenses and allocations are determined across specific sectors that align with the UAE’s commitment to sustainable development.
Allocations for public, university and higher education services, healthcare, and community protection services.
Provisions for pension funds, social assistances, marriage fund grants, Sheikh Zayed Housing programme grants, and other services.
Allocations to improve the efficiency of government services, enhance digital transformation, and streamline administrative processes.
Investments in key infrastructure projects, including roads, bridges, renewable energy, and communication.
Allocations for federal investment projects, managing financial assets, and expenditures related to debt instruments.
Includes support for those affected by natural events, settlement of financial obligations for federal entities, and allocations for special reserves.
The UAE federal budget is prepared based on six major elements that comply with international best practices and increase transparency and efficiency.
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