Overview of Federal Financial Planning for 2023 in the United Arab Emirates
The Financial Circular No (2) of 2022 issued by the Federal Ministry of Finance delineates the framework for updating the federal public budget draft for the fiscal year 2023. This circular is part of the broader Medium-Term Plan (2022-2026) aimed at ensuring fiscal discipline, transparency, and strategic allocation of resources across ministries and independent federal entities in the UAE.
Scope and Objectives of the Circular
The circular primarily targets all federal government entities involved in preparing the budget for 2023. Its core objective is to align the budget draft with the overarching financial and strategic priorities outlined in the medium-term plan. It emphasizes adherence to legal frameworks, including the Federal Law No. (26) of 2019 and the Federal Law No. (21) of 2019, which govern financial planning and budget preparation.
Specifically, the circular aims to:
- Ensure consistency with the approved fiscal policies and strategic objectives.
- Guide the preparation of budget estimates based on accurate data and realistic projections.
- Coordinate the allocation of resources across various sectors and programs.
- Facilitate the integration of budget planning within the broader national development agenda.
Key Provisions and Implementation Guidelines
Preparation and Data Requirements
The circular stipulates that all entities must prepare their budget estimates by considering:
- Historical financial data, especially the actual expenditures of 2022.
- Forecasts based on current and projected economic conditions.
- Alignment with the strategic objectives of the federal government and the medium-term plan.
Entities are required to submit their draft budgets electronically through the designated systems, ensuring accuracy and compliance with the prescribed formats.
Coordination and Review Processes
The circular emphasizes the importance of coordination among various departments, including:
- The Ministry of Finance, which oversees the overall review and consolidation process.
- Other relevant federal entities involved in sector-specific planning and execution.
All draft budgets must undergo a thorough review process, including assessments of their adherence to the legal and strategic frameworks, before submission for final approval.
Legal and Regulatory Foundations
The circular references several legal provisions that underpin the budget preparation process:
- Law No. (26) of 2019: Establishes the legal basis for budget planning and financial management at the federal level.
- Law No. (21) of 2019: Defines the principles of financial discipline and resource allocation.
- Decisions issued by the Council of Ministers, including Decision No. 6/39 of 2006, which guides the implementation of budget-related procedures.
The circular also underscores that all financial estimates must comply with the standards and guidelines set forth in these legal texts to ensure consistency and accountability.
Implications for Federal Entities and Future Steps
The circular reinforces the commitment of the UAE government to maintain a disciplined and transparent fiscal policy. It encourages federal entities to adopt best practices in financial planning and to leverage digital tools for efficient budget management.
Entities are expected to finalize their budget drafts by August 12, 2022, with the aim of submitting comprehensive, legally compliant budgets for review and approval by the Ministry of Finance. This process ensures that the final federal budget for 2023 will be aligned with national priorities and sustainable fiscal policies, setting a foundation for continued economic growth and development in the UAE.
