Gradual fiscal adjustments will help boost growth, IMF

The IMF Executive Board has said that the gradual fiscal adjustments will help the United Arab Emirates economy to record strong growth.

The directors of the global body recommended stronger fiscal consolidation, diversification of revenues and rationalisation of current spending as well as continued strengthening of public financial management during over the medium period for boosting economic growth in the country. The UAE economy has faced the impact of lower global oil prices but it is still in much better position than other nations that are more dependent on oil in the region.

They acknowledge the development of consolidated forward-looking medium-term fiscal framework and also urged the authorities to strengthen the debt management framework in order to better account for liabilities from Government Related Entities and Public-Private Partnerships.

The directors said that these steps will help prevent the negative impact on growth. The IMF experts welcomed the decision to introduce a VAT and increase excise taxes in the country that could be followed by a corporate income tax. They said that the authorities should phase out remaining energy subsidies but continue to protect the vulnerable.

"Priority should also be given to curb other current spending, while preserving public investment and enhancing its efficiency," the IMF said in a statement.