Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, approved a Dh58 billion ($15.79bn) budget for next year during a UAE Cabinet meeting on Sunday.
Next year’s planned expenditure for the Arab world’s second-largest economy is slightly lower than this year’s budget of Dh61.35bn, the largest in the country’s history.
"The UAE economy will be among the fastest to recover in 2021, and the government has dealt with the 2020 budget efficiently and has all the tools to continue its financial and operational efficiency in 2021," Sheikh Mohammed said.
"It will be a better and more efficient year for all."
The UAE's vital national projects will continue in 2021 and their development will remain a priority, he added.
In a separate statement, the Ministry of Finance said that about Dh26.04bn, or 42.6 per cent of the budget, would be allocated to social development and social benefits and Dh9.6bn, or 15.7 per cent, would be allocated to pay for education programmes. Some Dh4.97bn, or 8.1 per cent of the total, will go towards health care.
About Dh4.5bn, or 7.4 per cent of the total, will be spent on infrastructure projects, and Dh3.93bn has been allocated to specific federal projects such as the development of Etihad Rail and to the Emirates Space Agency.
The planned spending for next year comes as the region's economies tackle the dual challenges of the Covid-19 pandemic and lower oil prices.
The governments of Gulf countries have come up with stimulus packages worth billions of dollars to soften the pandemic’s blow on the private sector and people.
The UAE was the first country in the Mena region to announce a Dh100bn stimulus package by the central bank in March to support companies and people affected by the pandemic. That package included the Dh50bn Targeted Economic Support Scheme.
The size of the stimulus was later increased to Dh256bn as banks' capital and liquidity buffers were eased to encourage them to lend to businesses. The UAE Central Bank said in September that more than 300,000 customers had benefitted from Tess.
The International Monetary Fund expects Gulf economies to shrink by 6 per cent this year, lower than a previous forecast of a 7.1 per cent contraction, before bouncing back to grow by 2.3 per cent next year.
The UAE Central Bank forecast a 4.5 per cent contraction in the non-oil economy for the country for the remainder of this year in its second-quarter report.
Robust public health systems and timely fiscal and monetary action by Gulf governments and central banks have helped avert deeper healthcare and economic crises in the wake of the Covid-19 pandemic, according to the IMF's managing director Kristalina Georgieva.
The federal budget is in line with global economic changes without interfering with national development priorities, state news agency Wam reported.
The budget allocations for next year were distributed among various sectors – including initiatives that will enhance healthcare, education and citizens' housing programmes – and improving standards of living overall, according to Wam.
The UAE Cabinet also reviewed the performance of the Emirates Investment Authority, which serves as a sovereign fund holding federal government assets.
"The agency includes all the investment assets of the federal government and is considered ... an arm to consolidate the strength of our national economy," Sheikh Mohammed said in a tweet.
In July this year, Sheikh Mohammed announced that four federal assets – the Federal Water and Electricity Authority, Emirates Post, Emirates Transport and Emirates Real Estate Corporation – were being attached to the authority as part of a broader government restructuring exercise.
The pandemic has caused the worst recession since the Great Depression and disrupted global supply chains, hindered international trade and grounded air travel.
A second wave of infections has forced countries to impose measures ranging from lockdowns to quarantines to curb the spread of the deadly virus.
Globally, the pandemic has claimed more than 1.2 million lives, according to tracking data from Worldometer. The number of people infected passed 46 million, while more than 33.5 million have recovered.
The UAE recorded 1,278 new cases of Covid-19 on Sunday, after 112,546 additional tests. A further 1,606 patients recovered, while there was one new death.
