Sheikh Hamdan Bin Rashid: A key architect of UAE’s financial policies

Dubai: Sheikh Hamdan bin Rashid Al Maktoum has been holding the position of ‎Minister of Finance since the formation of the first Cabinet on December 9, 1971.

As a Federal Cabinet minister, he played an indispensable role in developing financial policies and government ‎spending.

Sheikh Hamdan presided over several high-level government entities that play a ‎vital role in supporting the economy and labour market in the UAE such as Dubai ‎Municipality, Al Maktoum foundation, Dubai Aluminum (DUBAL) and Dubai Natural Gas ‎Company Limited, Dubai World Trade Centre and others.‎

As the UAE Minister of Finance, Sheikh Hamdan spearheaded a number of fiscal reforms including the multi-year budgeting and economic diversification efforts at a time the country’s oil revenues were facing challenges from global economic dynamics.

The UAE began a rapid pace of fiscal adjustment in 2015‒16, which included measures to improve public revenue through value added tax (VAT) and excise duties, combined with the rationalisation of government subsidies.

Directing his team at the Ministry of Finance and coordinating with multilateral agencies such as the International Monetary Fund, the Arab Monetary Fund and the World Bank, Sheikh Hamdan was responsible in devising policy tools to strengthen government finances.

A slew of policy reforms such as a consolidated Medium-Term Fiscal Framework [MTFF] and multi-year budgets under his stewardship set a clear direction for fiscal policy for the country as a whole and better aligned resource allocation with local and national developments plans underpinned by goals embodied in the Vision 2021.

The UAE has been following a three-year budget cycle since 2008 [2008-2010, 2011-2013, 2014-2016]. The first cycle completed most of the well-developed infrastructure projects, while the second focused on enhancing federal services and maximising people’s well-being. Starting 2017, the country adopted a five-year budget for the 2017-2021 period, which is continued this year.

Over the past years, local and federal governments have made tremendous progress in strengthening their medium-term frameworks for fiscal policymaking and risk analysis. The federal government has introduced a medium-term budget cycle. Spending ceilings are set top-down and spending is presented on a programme basis with associated performance indicators.

The consolidated fiscal policy efforts under his leadership made the economy more productive and capable of alleviating the impact of the oil shock and other external vulnerabilities including the recent economic shock from COVID-19 on medium-term growth prospects of the nation.

Sheikh Hamdan said while announcing the latest UAE Federal budget 2021, that the main goal of developing the budget and preparing it in the form of a five-year plan is to upgrade social services and smart government services, increase customer satisfaction as well as highlight federal government efforts towards providing wellbeing, happiness and security to all members of society.

Under his leadership, the UAE’s macro-economic reform initiatives undertaken in the recent years included fiscal policy statement establishing a medium-term path for expenditure aggregates; medium-term macroeconomic forecasts; requirements for ministries to maintain budget estimates beyond the budget year and explicitly cost new measures; and hard cash budget constraints for ministries. Going forward, his enthusiasm for reforms will be greatly missed at the UAE Ministry of Finance.