Keep It Sound

How will the Smart Fiscal Planning (SFP) program help the Department of Finance (DOF) to run the government more efficiently, achieve fiscal sustainability, and support the government’s economic strategy?

The SFP program will help to ensure that public expenditure is affordable and sustainable in the medium term and that public resources are allocated efficiently and used more effectively by introducing the best international practices in public finance management reform, adapted to the reality and environment of Dubai. Among the main objectives of the SFP is to ensure that public expenditure is affordable and directed at providing public goods and services and creating investments in infrastructure, with economic, social, and environmental benefits that will add to the economic and social wellbeing of the people. It’s also crucial that fiscal resources are used to produce results and benefits as intended by governments. The DOF embarked on the SFP program by leading a transformation of Dubai’s fiscal management from an input-based framework, focusing on line-budget items and on monitoring where money has been spent as approved in the budget, transforming the system into a performance-based budget framework whereby the benefits or impacts of public goods produced and services delivered will become determinants of fiscal resource uses.

Dubai doubled its real estate transaction fee to 4% in an effort to make speculation harder. What is your outlook now?

The first objective of this step was to shore up the real estate market and reduce property speculation to contribute to the stability of the market and limit prices rises. In the future, Dubai will revise the ratio to control real estate prices through benchmarking with other countries on the same matter.

The IMF has repeatedly warned that another property bubble may form in Dubai if the authorities are not careful. What new regulations can we expect in the real state sector?

The current demand in the Dubai property market is more driven by the improved economy and increased population rather than speculation. RERA and the Dubai Land Department (DLD) have introduced several laws and regulations to provide the necessary standards to supplement the real estate sector. The government, in its effort to control the real estate market, doubled the property registration fee from 2% to 4% with the DLD in October 2013 to control speculation. The Dubai government issued Decree No. 43 of 2013 concerning the percentages for maximum property rent increases that are allowed upon the renewal of tenancy contracts. The decree states that there should not be any rent increase if the rent of the property unit is less than 10% of the average rent of a similar property in the same residential area. In November 2013, the government issued Decree No. 26 of 2013 and gave judicial powers to the Rental Dispute Settlement Centre, which was functioning under Dubai Municipality earlier. This center will be based at DLD and act as the unified committee and judge on all rental lawsuits in the Emirate within a period not exceeding 30 days from the date of referral of a case to them.