HH added: “The decline in oil prices is part of the global economic cycle. The oil-producing countries faced similar cases in the mid-eighties, which the UAE overcame thanks to its lead in setting the right methodology, managing resources and controlling costs. This phase is a continuous part of the economic cycle which I trust the country will overcome due to its proper planning, spending restraints frameworks, financial adaptation and creating sustainable government revenues by depending on alternative oil resources”.
The UAE’s leading sustainable journey received great interest and appreciation on different regional and international levels. During her visit to UAE last February, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), highlighted the wise fiscal policies adopted by the country; that enhanced its competitiveness and made bank assets, owned by the local banking sectors, the largest of its kind in the region making the UAE the second largest economy in the region and 17th globally according to the World Economic Forum (WEF) indicators.
Christine Lagarde highlighted the leading role of the UAE’s wise leadership in managing the process of growth and development. The goal is for the UAE to become one the most competitive economies in the world by 2021 with the implementation of diverse economic policies and by encouraging the growth of the industrial and non-oil sectors as alternatives to oil. The efforts exerted by different governments resulted in the UAE’s non-oil exports exceeding the aggregate of other GCC countries.
Christine Lagarde said: “Our discussions with the Ministry of Finance and UAE government entities touched on a profound awareness to economic challenges and the continuous pursuit to adopt and implement gradual fiscal consolidation through raising non-oil revenues, phasing out other energy subsidies, implementing the tax system next year and providing foreign investment data; to strengthen financial stability, and improve statistics and transparency, notably the collection and publication of data on the International Investment Position, and to implement further structural reforms to foster productivity and competitiveness in international forums”.
Dr. Hazem Al Beblawi, Executive Director of the IMF, praised the comprehensive development methodology adopted by UAE in local economic diversification to be one of the top countries in the region. Al Beblawi said: “The decrease in oil revenues paved the way to implement VAT on a regional level, and UAE had qualitative steps in this field. Aside from implementing economic diversification policies, decreasing oil dependency and strengthening and supporting innovative projects, the Ministry announced the beginning of VAT implementation in the coming years; to be, as witnessed, a pioneer in implementing and adopting fiscal and monetary reforms in the regional and international level”.
HE Obaid Humaid Al Tayer, Minister of State for Financial Affairs, said: “The decline in oil prices is considered a great opportunity to restructure the economy and stimulate more economic diversification factors, encourage production and industrial sectors to enhance its contribution in the GDP of the UAE. MoF is implementing a long-term strategy with clear objectives to develop a suitable environment for expanding the productive base and industrial sector, enhancing reliance on non-oil sectors, boosting investment in infrastructure and supporting foreign trade. This will in turn support economic integration and the growth of the UAE’s economy”.
HE Younis Haji Al Khoori, Undersecretary of MoF, said: “The Ministry established a solid platform that is based on specific standards and policies in the management of government financial work, which enabled it to study macroeconomics and develop effective financial forecasting to improve quality standards and fiscal policies. The Ministry has a task of providing and managing financial resources for the Federal budget without deficits. The Ministry also continues to support innovative projects in different fields and to implement best international standards in managing government financial resources; in order to achieve local economic stability and sustainability”.
HE Khalid Ali Al Bustani, Assistant Undersecretary for International Financial Relations at MoF, said: “The Ministry seeks to strengthen the UAE’s international network with different countries and regional and international financial entities with whom we share goals and visions for discussing best ways to diversify income resources and develop innovative solutions to face challenges in the next phase; in order to control expenditures, increase revenues and develop financial and tax reformation programs and systems aimed to enhance international financial stability and achieve sustainable economic development”.
A specialised IMF delegation conducts annual visits to the UAE within the framework of article IV discussions. These visits aim to evaluate financial, monetary and economic sectors. A report is issued with essential economic developments and statistical reports on an annual basis. The Fund’s report, issued in October 2015, highlighted UAE ability to achieve growth twice more than the economic growth in the Euro-zone at this time. It also underlined that the UAE is steadily moving towards the path of growth and prosperity, leaning on fiscal and monetary stability elements led by MoF, as well as its commitment to enhance the country’s position in the region and the world.