UAE MoF and IMF discuss Article IV and formation of a Macro-Fiscal Policy Department
The Ministry of Finance (MoF) welcomed the International Monetary Fund’s (IMF) delegation in its headquarters in Abu Dhabi recently for an Article IV consultation for 2017.
Both parties looked into the latest updates pertaining to the UAE’s Financial Performance Indicators and the Economic Performance index. Discussions also focused on economic management updates and financial policies that are being implemented in the ministry, innovative initiatives, budget performance indicators, financial policy coordination efforts, government resource enhancement initiatives, accounting policies and procedures, financial operations, in addition to an introduction on Al Etihad Export Credit Company and its activities.
During the meeting, HE Younis Haji Al Khoori highlighted the challenges that the global economic landscape is facing, considering the continual drop in the prices of goods and commodities at an international level. He added that the UAE is well aware of the need to enhance the analysing function of its financial policies in addition to implementing practical strategies to enhance its financial planning and policy development capabilities. A solid structure is needed to promote financial performance, which will in turn aid in achieving those goals- and this structure has to be adopted as part of the ministry’s daily operations, serving the purpose of supporting the UAE’s local economy.
He added: “The Ministry has been working on further developing the proposal that has been provided by the International Monetary Fund and the World Bank Group pertaining to unifying economic policies. We have formed a Macro-Fiscal Policy Department which is tasked with financial risk analysis, developing reports on best practises and international case studies, and forming the Financial Risks Manual, which should cover tools for managing risks for the budgeting process.”
The meeting was held in the presence of HE Younis Haji Al Khoori, Undersecretary of MoF, HE Khalid Ali Al Bustani, Assistant Undersecretary of the International Financial Relations Sector, HE Saeed Rashid Al Yateem, Assistant Undersecretary of Resources and Budget Sector, HE Mariam Mohammed Al Amiri, Assistant Undersecretary for the Management of Financial Resources, in addition to a number of executive managers at MoF.
During the meeting, MoF provided a presentation on the Federal Budget for 2017 and its structure- which included categorised government spending, in addition to looking at the Federal Budget for 2018, future government’s structure, MoF’s role in providing financial resources and assessing the financial system and its roadmap for implementation.
Attendees also focused on the “GFS” Government Finance Statistics Data system, which was developed by MoF in accordance with the IMF’s Government Finance Statistics Manual for 2014. MoF’s system combined and unifies financial data, and reviews them electronically on both local and federal levels. The system has received the “Idea of the Year 2016” award during the Ideas Arabia Awards ceremony. MoF has also taken part in the Meeting of the IMF Government Finance Statistics Advisory Committee (GFSAC) in Washington. Light was also shed on the e-Dirham system, its processes and achievements, in addition to the enhancements that will be applied to it in the near future.
During the meeting, participants discussed methods for enhancing government resources, the application of VAT in the UAE, fees pertaining to government services, government investments in critical sectors, and forecasts on government resources for 2017-2021. Additional topics included MoF’s financial policies which cover public-private partnerships (PPP), anti-fraud policies and bankruptcy law, the ERP system, in addition to training systems for government employees to raise their awareness on financial process that are meant to enhance financial planning and budget implementation, in line with accounting principles pertaining to maturity.
Al Etihad Export Credit Company’s goals were also presented, where the company held its first board meeting, headed by HH Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance in April. Discussions were held on the company’s role in promoting trade, supporting export activities, minimising credit risks for businesspeople in the UAE, in addition to providing them with opportunities to enter new markets and providing them with the required levels of protection. The company’s activities will further enhance the UAE’s non-oil based revenue.
In conclusion, attendees also looked at MoF’s innovative initiatives, particularly at the Sheikh Mohammed bin Rashid Al Maktoum Fund to Finance Innovation, which has received 24 applications for funding since its formation and up to the first quarter of 2017. These requests fall under a range of sectors, including agriculture, education, technology, energy, FinTech, financing, health, transportation and water-related projects. An amount of 1 per cent has been deducted from government budgets (with the exemption of salaries, scholarships and educational funding), where 79 per cent of that amount is being used to fund innovation, and 21 per cent of that amount is being used on innovation projects pertaining to the federal government.