Overview of the Federal Financial Circular No (1) of 2021
The Financial Circular No (1) of 2021 issued by the United Arab Emirates Ministry of Finance provides comprehensive guidelines for preparing the draft federal public budget for the fiscal year 2022. This circular is a key document that aligns with the broader strategic planning framework for the UAE, covering the medium-term plan for 2022-2026. Its primary aim is to ensure a standardized, transparent, and efficient budget preparation process across all federal ministries and independent federal entities.
Scope and Purpose of the Circular
This circular applies to all federal government entities involved in budget planning and management. Its purpose is to establish a clear framework for budget estimation, classification, and submission, facilitating adherence to legal and strategic financial management standards. The document emphasizes the importance of aligning budget proposals with the UAE’s economic objectives, especially in the context of the ongoing medium-term financial plan.
Specifically, the circular stipulates the procedures for updating and submitting budget estimates, considering the latest financial data, strategic priorities, and legislative requirements. It also underscores the importance of transparency and accuracy in financial data reporting to support sound decision-making and fiscal discipline.
Key Points and Procedural Guidelines
Budget Preparation and Classification
- The circular mandates that all entities prepare their budget estimates based on the electronic data of actual expenditures and transaction counts, aligned with the medium-term plan and strategic objectives.
- Budget classification must adhere to the specified categories, including operational expenses, investments, and other financial allocations, in accordance with the guidelines issued by the Ministry of Finance.
Updating and Submission Deadlines
- The circular specifies that the initial draft of the budget estimate should be submitted before 20 May 2021.
- Subsequent updates reflecting the latest financial data and adjustments must be submitted by 19 August 2021.
These deadlines ensure sufficient review and approval cycles, aligning with the legislative and strategic planning schedules.
Legal and Regulatory References
The circular references several legal frameworks that govern federal budget preparation, including:
- The Federal Law No (26) of 2019 on the federal budget and financial management, which sets the legal basis for budget planning and execution.
- The Cabinet Decision No (35/3) of 2013, which details the procedures for budget preparation and the roles of various entities involved.
- The Emirates Federal Budget Law and related regulations, which provide the overarching legal context for the budget process.
The circular emphasizes the importance of compliance with these legal provisions to ensure the legality and transparency of the budget process.
Strategic and Financial Management Objectives
The circular aligns budget preparation with the UAE’s broader economic and strategic goals, promoting efficiency, transparency, and fiscal sustainability. It encourages entities to adopt modern financial management practices, including the use of digital tools and data-driven decision-making.
Furthermore, it underscores the importance of integrating budget estimates with the country’s development priorities, ensuring that financial allocations support the UAE’s Vision 2021 and beyond.
Conclusion
Financial Circular No (1) of 2021 is a fundamental document that guides federal entities in preparing their budgets for 2022. It reinforces the UAE’s commitment to disciplined financial management, transparency, and strategic planning, ensuring that public resources are allocated efficiently to support national development objectives. Adherence to this circular is essential for maintaining fiscal stability and achieving the UAE’s economic ambitions over the medium term.
