10 billion dirhams to combat "Corona" ... and a controversy over the "2019 budget surplus"

20.8 billion dirhams, the government's share of excise tax and "value added"

While discussing the reasons for a surplus in the 2019 budget

The Ministry of Finance revealed that the total government share of the excise tax and value-added tax, two years after the start of their implementation, exceeded 20 billion and 855 million dirhams.

The Minister of State for Financial Affairs, Obaid bin Humaid Al Tayer, confirmed that the total share of the government from the two taxes was directed, during the past year, to the government's efforts to combat the Corona pandemic (Covid-19).

Yesterday, the works of the third session of the second regular session of the seventeenth legislative term of the Federal National Council began, headed by the President of the Council, Saqr Ghobash, and in the presence of the members of the Council, and the Minister of Energy and Infrastructure - Chairman of the Board of Directors of the Sheikh Zayed Housing Program, Suhail bin Muhammad Al Mazrouei, And the Minister of State for Financial Affairs, Obaid bin Humaid Al Tayer, and the President of the Audit Bureau, Dr. Harib Saeed Al Amimi.

Three members of the council directed four questions to government representatives, including three questions to the Minister of Energy and Infrastructure - Chairman of the Board of Directors of the Sheikh Zayed Housing Program: The first from the member Hamid Ali Al-Abbar Al Shamsi about “procedures for granting people of determination housing assistance and cases of exemption from paying it.” The minister asked for a postponement. The response will be to the first quarter of 2021, after which the Council will be informed of the updated law, after the approval of the new system for managing the Sheikh Zayed Housing Program by the Council of Ministers within the Ministry of Energy and Infrastructure, which was approved by the member asking the question.

The second deputy head of the council, Naama Abdullah Al Sharhan, asked Al Mazrouei about “paving the internal streets in the Al-Ajili area in the Emirate of Ras Al Khaimah,” during which the minister revealed that the total amount spent on federal road development projects during the period from 2017 to 2020 exceeded 18.5 billion Dirhams, including more than 7.5 billion dirhams for the renewal, development and maintenance of roads.

He also responded to another question, about “truck accidents in the Shuka area,” by saying: “This matter is mainly subject to the local authorities, because the road is not federal.

However, there is cooperation with the local authorities in Ras Al Khaimah, to improve the efficiency of the passage of trucks and their roads.

Member Obaid Khalfan Al-Ghoul Al-Salami addressed a question to the Minister of State for Financial Affairs, about “facilities and credit concentrations of national banks”, to which he responded by saying that “the loans granted by banks are made on a commercial basis and depend on their level of risk tolerance, and are granted according to the bank’s policies that it should Assessing risks and ensuring guarantees are in accordance with the instructions of the Central Bank, especially as it relies on granting funded and unfunded credit facilities based on estimates related to the level of risk, which are evaluated by risk management and planning managers, who work completely independently from the CEO of each bank, to ensure transparency and assurance. From the safety of paying customers, whether individuals or companies, ”affirming that“ the banking sector in the country is very strong. ”

The minister stated that with regard to facilities, the bank issued a circular to monitor the limits of credit concentrations granted by the bank, including the maximum limits, with a five-year period for banks to correct the conditions of exceeding the limits, in accordance with international requirements.

After the establishment of the Al-Etihad Credit Bureau, in coordination with the Central Bank, banks were required to request a report on any person or company wishing to obtain a loan.

Commenting on the minister's response, member Obaid Khalfan Al-Salami spoke about the existence of what he described as a "common loophole between the central bank and banks", which a number of investors exploited to escape with loan funds, a phenomenon that occurred at the level of 16 banks during the period from 2000 to 2020.

The members took a long time to discuss the reasons for the existence of a surplus in the 2019 budget, estimated at 10 billion and 811 million dirhams, and whether or not it represented a constitutional or legal violation that required a question.

A number of members agreed on the importance for the report to include the reasons for the budget surplus, and whether it was related to difficulties encountered by some ministries or federal agencies, which prevented them from completing the plans for which the budget was allocated, and they wondered about the nature of the role that the Audit Bureau plays in approving the budget, given the existence of Such a surplus.

The Minister of State for Financial Affairs stated that the existence of the surplus is not considered a legal violation, since the violations must be based on laws, explaining that in the event of any deficit or surplus in the budget of any ministry, this requires that entity clarify the reasons in the final report submitted to the Audit Bureau.

He revealed that the amount of the surplus included in the 2019 budget is basically the total government share of the value-added and selective taxes, during the first year of their application (2018), pointing out that the outcome was entered into the consolidated final account of the Federation's budget and the final accounts for the fiscal year 2019.

He stressed that the government’s budget surplus, which is related to its share of the selective and value added taxes, will be directed to support facing the "Covid-19" pandemic.

He added: “The government has flexibility and a very strong infrastructure, and it is keen to discuss both large and small notes on the budget as well as carefully discussing the notes that are received on the final account from the Audit Bureau, and therefore if the remarks contained in the parliamentary report on the final account were substantial, the Bureau would have stopped before it. Accountability, and the government would not pass it, especially since every ministry or federal entity submitted to the Bureau detailed items on the accounts for the Bureau to say its word about it.

According to a report presented by the Ministry of Finance during the session, the outcome of public revenues for the fiscal year 2021 comes from four tracks: The first is “taxes”, where the total government share of excise tax and value-added tax during the first two years of their application amounted to 20 billion and 855 million dirhams, Among them, 10 billion and 811 million dirhams, received as a financial surplus in the consolidated final account for the year 2019, compared to 10 billion and 43 million dirhams, within the revenues of the fiscal year 2020, it is expected that the revenues of the government’s share of the two taxes will decrease during the fiscal year 2021, to reach eight billion and 100 million dirhams .

The second track of public revenues is represented in the “Emirates contributions” totaling 18 billion and 303 million and 900 thousand dirhams, and the third track is the revenues of federal authorities with a total of 13 billion and 260 million and 300 thousand dirhams, while the last track is investment revenues totaling 13 billion and 438 million dirhams.

Unjustly spent

In an intervention by a council member, Saeed Rashid Al-Abidi, he emphasized that the word "unlawfully disbursed", which appears in the Audit Bureau's report on the aspects of spending some bodies, means that those who do not have have spent on those who are not entitled, asking: Did the Audit Bureau receive inquiries Are you clear about the amounts that have been spent illegally?

The head of the Audit Bureau, Dr. Saeed Hareb Al-Amimi, replied that the Bureau is carrying out its supervisory work in accordance with the legislation, and if it deems any departure from the exchange operations and budget management from any ministry or federal entity, it addresses that entity and the Ministry of Finance for inquiries, explaining that when the observations on an entity or Ministry, submits a report to the Council of Ministers, to take what it deems appropriate.

Al-Amimi said: “The Audit Bureau bears full responsibility for the supervisory reports that it issues,” noting that any work is subject to right and wrong, and the bureau is always moving in front of what amounts to a violation.

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