Rebounding oil prices give the emirate more room to spend
Abu Dhabi’s plan to invest AED50 billion ($13.6billion) over three years to stimulate the economy is expected to be covered by an increase in hydrocarbon revenues.
Moody’s Investor Service said the economic stimulus package will amount to five per cent increase in government spending, which can be bridged by petro-dollars if oil prices remain above $60 per barrel during the implementation of the plan, reported The National.
The Abu Dhabi government for its 2018 budget, adopted the baseline of oil prices at $50 per barrel, but the recent rise in oil prices will provide it with significantly more fiscal headroom than the budget accounted said the report.
One risk to this fiscal forecast, however, is the recent rise in oil prices and the potential for Opec to ease production cuts, with a meeting scheduled in Vienna later this month.
Additional government spending is expected to stimulate non-oil growth as the federal authorities take measures to improve the business environment for foreign investors. The UAE has proposed to allow full foreign ownership of companies outside the freezones and will introduce 10-year visas to some expats to attract talent, reported The National.