Overview and Purpose of the Circular
Financial Circular No (3) of 2020 issued by the United Arab Emirates Ministry of Finance serves as an official guideline for preparing the draft federal public budget for the fiscal year 2021. This circular is part of the broader budget planning framework established within the five-year plan for 2017-2021, aiming to ensure transparency, consistency, and strategic alignment across federal ministries and independent entities.
Scope and Target Audience
This circular primarily targets federal ministries and independent federal entities involved in the budget preparation process. It provides detailed instructions and legal references necessary for the development of the 2021 budget, ensuring compliance with existing financial legislation and strategic priorities set by the UAE government.
Legal Framework and References
The circular is grounded in several legal and regulatory texts, including:
- The Federal Law No. (26) of 2019 on the UAE Federal Budget, which establishes the legal basis for budget planning and execution.
- Decisions issued by the Council of Ministers, such as the resolution No. (1/10/2016), which outlines the strategic framework for the 2017-2021 budget plan.
- Additional resolutions and circulars that specify procedures for budget approval, amendments, and financial management within the federal system.
These legal references ensure that the budget drafting process adheres to the UAE’s financial laws and strategic directives.
Key Components and Instructions
Budget Planning and Strategic Alignment
The circular emphasizes the importance of aligning the 2021 budget with the strategic objectives outlined in the five-year plan. Ministries and entities are instructed to develop their budgets based on updated financial data, strategic priorities, and performance indicators.
Procedural Steps for Budget Preparation
- Review and update financial data, including revenue forecasts, expenditure estimates, and financial commitments.
- Coordinate with the Ministry of Finance to ensure compliance with the approved frameworks and guidelines.
- Prepare detailed budget proposals, including justifications, expected outcomes, and resource allocations.
- Submit the draft budget for review and approval, following the specified timelines and procedures.
The circular also highlights the need for transparency and accuracy in the preparation process, encouraging ministries to use reliable data and adhere to financial regulations.
Financial Management and Amendments
The circular specifies procedures for managing the budget during the fiscal year, including amendments and adjustments. It mandates that any changes to the approved budget must be justified, documented, and approved by the relevant authorities, ensuring fiscal discipline and accountability.
Furthermore, the circular underscores the importance of monitoring and reporting, requiring ministries to implement effective financial controls and provide periodic updates on budget performance.
Implementation Timeline and Follow-up
The circular establishes clear deadlines for each stage of the budget preparation process, from data collection to final submission. Ministries are urged to adhere strictly to these timelines to facilitate timely approval and implementation of the budget.
Post-submission, the Ministry of Finance will review the proposals, conduct necessary audits, and coordinate with other government bodies to finalize the federal budget for 2021.
Conclusion and Strategic Significance
Overall, Circular No (3) of 2020 underscores the UAE government’s commitment to a disciplined, transparent, and strategic approach to public financial management. By providing comprehensive guidelines rooted in legal frameworks, it aims to streamline the budget preparation process, promote fiscal responsibility, and support the achievement of national development goals during the 2017-2021 period and beyond.
