UAE Ministry of Finance issues budget preparation circular
In line with preparing the draft of the federal budget for the fiscal year 2018, which covers the second year in the five-year plan for 2017-2021, His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance (MoF), issued the financial circular No. (1) of 2017 concerning the preparation of the draft of the federal budget for the fiscal year 2018.
The five-year budget plan for 2017-2021 was prepared for ministries and independent federal entities in line with UAE Vision 2021 and the UAE Cabinet’s resolution No. 7/168 and /6 of 2015. The resolution extended the term of the federal budget from three years to five years (2017-2021), taking into consideration the annual updates on plans.
His Highness Sheikh Hamdan bin Rashid Al Maktoum stressed the importance of adopting the zero-based budgeting system while preparing the draft of the federal budget and to work as per the rules and regulations of the consolidated financial procedures manual.
By implementing the principles of the zero-based budgeting system, the Ministry aims to recalculate the costs of activities and programmes of federal government entities to reach the actual cost of the required services without over-spending. This aims to create comparisons of similar services between various government entities, private sectors and other entities, and requires to:
Identify the activities and services related to the agreed objectives
- Identify the necessity of activities and services and thoroughly analyse the cost
- Set the priorities based on the analysis of the cost and benefits according to their contribution in achieving the objectives
His Highness highlighted that MoF has provided the guidelines to prepare budget draughts for all federal entities on the Ministry’s website. This aims to enhance the government’s financial performance, develop effective mechanisms to prepare and implement the UAE’s budget and enhance the financial budget planning mechanisms according to the Ministry’s vision.
His Highness Sheikh Hamdan also stated that the budget draft for the fiscal year 2018 will be prepared to develop and accomplish optimal use of the government’s financial resources to achieve happiness and positivity in society, enhance the sustainable allocation of resources to serve Emiratis, and provide the best educational, health and societal services for Emiratis and residents of the UAE.
His Highness Sheikh Hamdan bin Rashid Al Maktoum highlighted that MoF seeks to achieve its strategic objective which includes highest returns on financial resources, providing transparent reports, and ensuring the implementation of MoF’s message to use the federal government’s resources through effective financial management and adopting sound financial policies. This comes as part of implementing the government’s strategy launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, which stresses on developing the federal government’s management, adopting sound financial policies and procedures, enhancing income services and receiving customer satisfaction. The strategy focusses on the national economy’s strength and its ability to increase economic growth and investments through attracting capitals, contributing to drive sustainable development and the wise leadership’s commitment to provide the best services for Emiratis and residents.
His Highness Sheikh Hamdan bin Rashid Al Maktoum highlighted the key financial instructions to prepare the budget draft for the fiscal year 2018, including:
- Preparing and studying government entities’ estimated revenues and expenditures in line with the issued laws, decrees and decisions.
- Rationalising and controlling expenditures without affecting the ability of government entities to implement and achieve its goals and programmes.
- Working on the preparation of a development budget which encourages expenditure on productive investment
- Preparing the draft of the federal budget according to the best international practises
- Using the latest automated systems to prepare the draft of the budget
HH Sheikh Hamdan bin Rashid Al Maktoum stressed the country’s significant achievements and highlighted that the UAE ranked first in the Arab world and 24th globally out of 176 countries in the transparency index in 2016. UAE scores 66 points in the index reported by Transparency International and tops other countries including Spain, Malaysia and Georgia.
HE Younis Haji Al Khoori, Undersecretary of MoF stressed the need to adhere to the rules and regulations specified by the financial circular. During his meetings with experts in federal entities, HE Al Khoori pointed out the Ministry’s readiness to receive any feedback and suggestions for improvement, which will be taken into consideration when preparing the Ministry’s development projects related to the financial systems.
HE also stressed our wise leadership’s keenness to provide better services to customers and strategic partners as well as increase the level of satisfaction with government performance. The Ministry made a quantum leap in modernising and developing the electronic financial systems.
HE clarified the need to refer to the 2016 Consolidated Financial Procedures Manual when preparing for the draft federal budget and the model structure and tables to be contained in draft budgetary plans, as well as the related laws and regulations. The manual is a fundamental reference when preparing for the draft federal budget, according to the principles of zero-based budgeting system, and was introduced in 2011.
The Ministry is also keen to coordinate with all the federal entities to provide infrastructure and government services as well as develop the electronic financial systems. This is in line with our wise leadership’s direction to shift to a smart government and provide high quality services to UAE citizens and residents.
HE AL Khoori indicated the different projects related to developing the financial electronic systems conducted by the Ministry since 2016 and completed during the first quarter of 2017. The Ministry of Finance has shown significant progress in developing the e-system to prepare the general federal budget, by improving the quality of services provided to federal entities that use automated systems when preparing the budget. The most prominent ones include:
- Linking the e-system for the preparation of the federal budget to the Federal Authority for Government Human Resources’ federal financial system.
- Providing data for employees from federal entities that use automated systems to prepare their budgets.
- Automatically updating the data for federal entities’ employees to make the necessary amendments as per the regulations specified in the circular
- Linking the organisational structure to that of the federal entities’ programmes.
- Providing financial data and identifying costs for ministries and entities’ organisational units in different geographical locations in the UAE.
- Speed of decision making by officials to ease the process of providing financial data and reports with high quality.
- Compare costs from goals, programmes and activities in the organisational units.
- Developing the cash flow plan as a five year plan 2017-2021
- Distributing the estimate expected cash flows according to the strategic objectives, and categories of expenditures compared to the actual disbursement of the previous year.
- Preparing the payrolls for federal entities according to the employees and financial regulations in each federal entities ( general employment/ special employment)
The most prominent development projects for the federal financial systems during 2016:
- Upgrading the data into the federal financial system to the newest version.
- Replacing the linking mechanism of the federal financial system using electronic services.
- Modernising the infrastructure of the federal financial system according to the best international practises.
- Linking the federal financial system with the automated archives.
- Linking the procurement system with the suppliers system.
- Applying multiple working groups on the federal financial system.
HE Al Khoori stressed the Ministry’s readiness in providing technical support and responding to all inquiries by federal entities. The financial circular specified 20/04/2017 as the fixed deadline for submitting a draft budget to MoF.
HE Younis Haji Al Khoori highlighted that the Ministry will continue to develop the procedures for preparing the draft budget with the help of specialised team. The Ministry of Finance launched its unified external call centre (600533336) or through the email address: email@example.com.The call centre provides support on any public inquiry regarding MoF’s electronic and smart services in a fast and efficient manner.
MoF previously held a workshop to equip employees with the necessary tools and skills on how to use the electronic system for the preparation of the draft budget for all federal entities, according to the project concerning developing the electronic system for the preparation of the federal budget starting January and February 2017. The Ministry will continue to hold workshops to train all federal entities during March 2017.