Federal Budget Framework

The Ministry of Finance (MoF) moved from the “Line Item Budget” applied in 1972 to “Program and Performance-based Budgeting” in 2001. In 2008, a medium-term (three-year) budget was implemented and a medium-term zero-based budget was adopted in 2011. Then, in 2014, COFOG (classification of the functions of government) and an automated system were implemented until a five-year zero-based budget was adopted for the term 2022-2026.

In the last 49 years, the UAE’s budget has increased more than 291-fold from AED 200 million in 1972 to AED 58.3 billion in 2021. This has been accomplished through optimal distribution, efficient use of resources, and maintaining a balance between revenue and expenditures.

The federal budgeting process consists of five phases implemented according to laws, regulations, circulars and relevant manuals, namely: planning, preparation, reviewing, approval and execution. Budget expenses and allocations are distributed to the six following sectors: social development, social benefits, infrastructure and economic resources, government affairs, financial assets and investments, and other federal expenses.


Federal Budget Framework and Steps

Introducing the general budget

The general budget is the financial program 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 the income and expenditure are balanced.

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.


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 a budget cap, approved strategic objectives, indicators, revenue forecast, and the fixed deadline for submitting a draft budget to the 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 programs, 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, programs, 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 comprises 12 months, starting from January 1 and ending on December 31 of each year.


Circular Issuance
Minister of Finance

The minister 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.


Forecasts for Revenue and Expenses
Federal Entities

Each federal authority determines its programs, plans, and Key Performance Indicators, as well as their initial forecasts for revenue and expenses, and submit them to MoF.


Draft Budget Law
Ministry of Finance

MoF prepares an annual draft budget law, and a draft resolution of the medium-term plan, and submits both to the UAE Cabinet.


Preparation for Final Approval
UAE Cabinet

The 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).


Draft Feedback
Federal National Council

The FNC discusses and provides its feedback on the draft and submits it to the Supreme Council (SC) for approval.


Review and Acceptance
Supreme Council

The Supreme Council reviews the draft law along with the FNC's feedback and notifies MoF on the readiness of the budget law.


Budget Law Submission
Ministry of Finance

The budget law is submitted to MoF which, in turn, informs all federal authorities about their allocations.


Federal Budgeting Process

The budgeting process is initiated by releasing a financial circular on the 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:

Ministries and federal authorities prepare their draft budgets on the basis of a medium-term plan

Adopt the principles of a zero-based budgeting system

Work as per the rules and regulations of the consolidated financial procedures manual

Based on the general strategic objectives of the federal government (UAE Vision 2071), 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 programs.

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 the 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.

This system achieves the following objectives

  • Identifying main and complementary services for each entity.
  • Comparing similar activities in various government authorities.
  • Enhancing performance efficiency and maximizing the use of government spending.
  • Promoting the principles of transparency and open data approach.

Promoting the principles of transparency and open data approach

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


Social development

Government Affairs

Social Benefits

Infrastructure and Economic Resources

Financial assets and investments

Other Federal Expenses

Phases of Budgeting Proce​ss


The planning process is based on the federal government strategy. Then, strategic and sectoral plans, as well as program structures are developed for each ministry and federal agency.



This phase begins by setting national priorities, forecast of revenues, assigning CAPEX budget based on priorities and spending targets, translating spending targets into budget caps, and preparing budget circular.


Ministries and federal entities prepare their respective draft budgets and the details of the budget caps in accordance with the set strategic objectives. They also prepare budgets for ongoing and new activities, as well as administrative services. They prepare their first complete draft budget for the whole budget cycle, discuss their projects internally to determine priorities, and finally submit their draft budget to MoF.



MoF reviews and discusses budget allocation of the ministries and autonomous agencies with these parties according to strategic objectives, government directives, revenue forecast and budget caps.



Final budget law is prepared and submitted to the Cabinet. The budget law is then duly discussed, approved and enacted by the Cabinet



Copies of the federal budget law are sent to all federal entities along with their respective budgets to begin execution.


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

Federal budgeting is prepared based on six major elements that all comply with international best practices and increase transparency and efficiency. These elements can be grouped under the following headings:



Seamless integration of annual budgets in three-year budget cycles


Alignment of the budget with government strategy through program budgeting and performance monitoring


Elimination of unjustified vacancies



Integration of CAPEX and OPEX budgeting



Application of zero-based budgeting


Definition of sectoral spending targets and ministry/autonomous agency budget caps by the Financial and Economic Committee

Federal Budget Execution

The Ministry of Finance (MoF) adopts the concept of providing open data adhering to the highest standards of complete transparency, openness, cooperation and sharing. The ministry publicises content that is free to access and may be shared, to increase public knowledge of the work and practices conducted by MoF each day.

The MoF issues quarterly financial performance reports on the execution of the Federal Budget, along with final account summaries in the annual detailed reports of expenses and revenues.

Additionally, it issues a set of files that include decrees, laws, circulars, and manuals of the rules governing budgeting, preparing final accounts, closure of budgets, as well as all other means that ensure the provision of federal government financial resources management tools that ensure transparency and security of the financial system in accordance with best practices.

You can access studies, reports, and statistics on the UAE’s finances (in Arabic only) on this page in multiple formats.

Budget Development

Figures show that the UAE’s budget increased more than 291-fold in 49 years, from AED 200 million in 1972 to AED 58.3 billion in 2021.

It was in 1972, when “line item budget” was first applied to determine the types and volume of expenditure against allocations for each line item without linking them to the objectives to be achieved.

In 2001, and after studying international experiences, “Program and Performance-based Budgeting” was adopted, and input allocations were linked to output objectives. In 2011/2013, a medium-term (three-year) budget was introduced and followed according to the zero-based budget framework, which specifies activities and services against the cost. This results in better use of resources and expenditure to achieve the best results. As of 2014, COFOG and an automated system were implemented for budgeting process.

The aim of the budget development and increase of allocations was the implementation of plans and initiatives to develop infrastructure, improve the quality of education and health services in the UAE, and enhance the performance of all sectors that serve the UAE citizens and residents. Federal budgets have always given priority to benefits and social development, such as providing housing, health care, and education for citizens.