MoF issues financial circular to prepare the general federal budget for the fiscal year 2016

HE Obaid Humaid Al Tayer, Minister of State for Financial Affairs recently released the financial circular No. (2) of 2015 on the preparation of the general federal budget for the fiscal year 2016. This initiative is in line with the medium term 2014-2016 plan for  both federal entities and independent bodies, and follows the UAE Cabinet’s Resolution No. (1/181) for 2008, which mandates the ministries and federal entities to: Prepare the general federal budget on the basis of a three year medium term plan; adopt the principles of a zero-based budgeting system; and work as per the rules and regulations of the consolidated financial procedures manual.

The circular stresses the need for federal entities and independent bodies’ to commit to the principles of the zero-based budgeting system, as well as the rules and regulations stated in the consolidated financial procedures manual for the preparation of the draft budget for the next year.

Commenting on the issuance of the circular, HE Obaid Humaid Al Tayer stressed the federal government’s, (represented by the Ministry of Finance( MoF)), commitment to prepare a draft budget for the fiscal year 2016, with the optimum use of federal government resources in order to achieve a positive impact on society with government spending and attain the highest returns possible. HE also highlighted that good financial management and fiscal policies, as well as upholding high levels of transparency, play an active role in offering high levels of services for UAE nationals as well as educational, health and social services for UAE citizens and residents.

HE added: “The Ministry’s main goal behind adopting a zero-based budgeting system is to have access to real cost through measuring the cost of all approved activities and comparing them to the cost of similar activities offered in private sectors. This falls in line with the implementation of the government strategy launched by HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister and Ruler of Dubai, aimed at improving the management of the federal government, adhering to prudent fiscal policies, increasing sources of income to achieve customer satisfaction; which in turn confirms the strength and durability of the UAE’s economic situation, its opportunity for growth and provides and maintains high levels of services for citizens and residents.”

The circular explains the financial foundations and directions that need to be adhered to in order to prepare the general federal budget 2016, as well as to prepare and study income and expenditure estimates in government agencies, in accordance with the provisions of the laws, decrees and decisions issued until date of preparing the estimates, in addition to rationalising public spending and controlling expenditures. This should not affect government entities in achieving their goals in an effective and efficient manner, as well as work on preparing a development budget that supports investment spending.

HE Saeed Rashid Al Yateem, Assistant Undersecretary of Resources and Budget Sector at MoF, stressed the importance of independent federal ministries and entities to commit to the rules and regulations outlined, and to update the data using the principles of a zero- based budgeting system while preparing the general federal budget for the fiscal year 2016. HE also stressed on the Ministry’s full support in providing the necessary training and answering ministries and federal entities’ inquiries on how to use the automated system for the preparation of the draft budget, as well as explaining how to apply the principles of zero-based budgeting system through a technical support centre accredited by the Ministry.

HE also stressed on the importance of linking the activities and related services with the goals of federal entities, and showed the necessity of the cost analysis of their activities and services, and how to determine priorities based on the principle of cost-benefit analysis, arranged according to their contribution to the achievement of the goals adopted.

Over the past two years MoF has been keen on coordinating with all the independent federal entities and ministries, with the aim of switching the draft budget plan of 2014-2016 to smart government and upgrading the electronic financial system, as well as providing the best level of service in facilitating the transactions of citizens and residents, and provision of infrastructure and government services.

HE also indicated the importance of referring to the consolidated financial procedures manual for 2015, and its role in facilitating the preparation of the budget line 2014 – 2016, in addition to the templates and tables associated with it, which are based on regulatory procedures and policies that can be used as a reference for developing budgets according to zero-budgeting principles.

Within the circular, MoF emphasised on the importance of focusing on strategic goals, and has also set the date April 16, 2015 as the deadline for delivering the draft budget of the fiscal year 2016. Furthermore, MoF assigned a specific phone number (026987575) as a special hot line for federal entities’ inquiries, and placed an inquiry form on its website for online support:

http://mofservices.gov.ae/FFSS/anonymous/AddRequest.aspx

MoF will be hosting a series of workshops for all ministries and federal entities to fully clarify the steps involved in preparing the annual budget and to address questions. MoF will also provide all documents and data needed by federal entities on their website, which can guide them in preparing budgets, in order to improve the government’s financial performance and the development of effective mechanisms for the preparation and implementation of the federal budget, and to improve financial budget planning mechanisms as per the Ministry’s vision.