ECONOMIC DEVELOPMENT - UAE Interact

80 UNITED ARAB EMIRATES YEARBOOK 2006ECONOMIC DEVELOPMENT 81PUBLIC FINANCE 2003THE BALANCE OF PAYMENTSThe balance of payments achieved an overall surplus of Dh12.8 billion in 2004 compared to asurplus of DH4.7 billion in 2003. Both the trade balance and the current account reflected highersurpluses than in 2003, while the negative balance of the capital and financial account increased by8.3 per cent. Despite an increase by 18.3 per cent in value of total imports (FOB) compared to2003, the surplus in the trade balance rose by 34 per cent in 2004 to reach Dh104.9 billion. Thiswas mainly due to the increase in receipts from hydrocarbon sector exports, other exports and reexports,and accordingly the value of total exports and re-exports increased by 23.3 per cent toDh303.9 billion.The increase in value of hydrocarbon sector exports was attributable to increasedproduction volumes (partially related to increased refining capacity), improved gas productioncapacity and the expansion in production of condensates on the one hand, and to the increasein oil prices and hence prices of gas, condensates and petroleum products, on the other. Theweighted average price of oil rose from US$28.1 a barrel in 2003 to US$36.1 a barrel in 2004(a rise of 28.5 per cent). This, in turn, led to an increase in value of exports of oil (includingcondensates, which are not included in the country’s production quota set by OPEC) from Dh81.2billion in 2003 to Dh108.8 billion in 2004 (34 per cent) and in value of exports of gas by 19.9per cent, compared to 2003, to reach Dh17.2 billion. The value of petroleum products’ exports alsoincreased to Dh15.2 billion in 2004 against Dh13 billion in 2003 (16.7 per cent). The value ofcommodity exports, including the free zones, has continued to rise over the past few years, toreach Dh60.9 billion compared to Dh51.2 billion in 2003 (19.1 per cent). Free-zones’ exportsconstitute 80 per cent of the country’s commodity exports, valued at Dh48 billion in 2004.Moreover, the value of re-exports (including non-monetary gold) also rose from Dh86.1 billion in2003 to Dh101.8 billion in 2004 (18.3 per cent). A substantial portion of this increase reflectsgreater reliance by some GCC countries on the UAE’s seaports for imports, a phenomena that hasreceived a boost from establishment of the GCC Customs Union.On the other hand, the value of total imports FOB (including free-zone imports) increased fromDh168.3 billion to Dh199 billion. This may be attributed to rapid construction and buildingactivity, as well as rising domestic and external demand resulting from population increase andthe need to meet the requirements of re-exports. Imports per capita rose from Dh15,300 in 2003to Dh17,100 in 2004. Data on the structure of imports during 2004 show that consumer, capitaland intermediate goods maintained almost the same shares recorded in 2003, at 60 per cent, 30per cent and 10 per cent of total imports respectively. The geographical distribution of the totalvalue of imports shows that the European countries’ share dropped from 30.1 per cent in 2003to 29.8 per cent in 2004. Asian countries rose slightly to 45 per cent against 44.7 per cent in2003. It is noteworthy that countries in this group maintained the same respective shares as in2003. Meanwhile, the North American share declined from 9.9 per cent in 2003 to 9.6 per centin 2004.The balance of the current account rose by 71.3 per cent in 2004 compared to 2003, to reachDh47.5 billion.Estimates of UAE Balance of Payments (Dh bn)2003 2004*Current Account Balance ........................................................ 27.73 47.51Trade Balance (FOB) ............................................................... 78.26 104.86Total Exports of Hydrocarbon........................................ 108.57 141.18Crude Oil Exports .................................................. 81.22 108.79Petroleum Products Exports .................................... 12.99 15.16Gas Exports ........................................................... 14.36 17.23Total of Non Hydrocarbon Exports ............................... 51.93 60.94Free Zone Exports .................................................. 41.34 47.97Other Exports 1 ..................................................... 10.59 12.97Re-Exports 2 ................................................................ 86.06 101.78Total Exports and Re-Exports (FOB) ........................... 246.56 303.90Total Imports (FOB)..................................................... –168.29 –199.04Total Imports (CIF) ..................................................... –191.24 –226.18Other Imports 3 ..................................................... –147.93 –175.68Free Zone Imports ................................................. –43.31 –50.50Services (NET) ......................................................................... –33.27 –39.72Travel ........................................................................... –9.25 –10.58Transport...................................................................... –1.19 –2.12Government Services.................................................... 0.11 0.12Freight and Insurance................................................... –22.95 –27.14Investment Income (NET) ......................................................... –0.14 0.93Banking System 4 ......................................................... 1.66 2.72Private Non-Banks........................................................ 0.28 0.30Enterprises of Public Sector .......................................... 7.16 13.91Foreign Hydrocarbon Companies in UAE....................... –9.24 –16.00Transfers (NET) ........................................................................ –17.12 –18.57Public Transfers....................................................... –1.00 –1.50Workers Transfers ................................................... –16.12 –17.07Capital and Financial Account ............................................... –19.58 –21.21Capital Account 5 ......................................................... — —Financial Account ......................................................... –19.58 –21.21Enterprise of Private Sector..................................... 19.44 39.80Direct Investment............................................... 11.99 27.00Outward........................................................ –3.64 –3.70Inward .......................................................... 15.63 30.70Portfolio Investment........................................... — 7.35Banks................................................................ 1.05 –2.56Securities ...................................................... –6.55 0.40Other Investment .......................................... 7.60 –2.96Private Non-Banks ............................................. 6.40 8.01Enterprises of Public Sector..................................... –39.02 –61.01Net Errors and Omissions ......................................................... –3.42 –13.47Overall Balance: Surplus (+) or Deficit (-) .............................. +4.73 +12.83Change in Reserves (- indicates an increase).......................... –4.73 –12.83Net Foreign Assets with Central Bank ........................... –4.59 –12.97Reserve Position with I.M.F. .......................................... –0.14 0.141 Including estimates of exports from all emirates.2 Including re-exports of non-monetary gold.3 Including imports of non-monetary gold.4 Central Bank and all banks.5 Data not available at time of compilation.* Preliminary Estimates Source: Central Bank Statistical Bulletin Vol. 25 No. 1.