(Bloomberg) -- Abu Dhabi plans to spend $13.6 billion over three years and allow freezone-based companies to take part in government tenders as the oil-rich emirate seeks to stimulate the economy.
The government will take steps to support new industries, encourage tourism and make it easier to do business, Crown Prince Mohammed Bin Zayed Al Nayhan said. Officials have been instructed to “draw up a working plan for allocations within 90 days,” he said. Abu Dhabi’s stock index gained as much as 1.1 percent and closed 0.8 percent higher Wednesday.
Gulf Arab nations are stepping up efforts to shift their economies away from dependence on oil and gas income, by encouraging new industries and attracting foreign investment. The past year’s rebound in crude prices, which climbed back above $70 a barrel, has allowed them more room for spending. Saudi Arabia, the biggest Arab economy and world’s largest oil exporter, also announced a plan to revive growth.
"Higher oil prices are allowing Abu Dhabi to increase spending and boost growth, reversing some of the tightening measures taken in recent years," said Ziad Daoud, the chief Middle East economist for Bloomberg Economics. "The emirate does have plenty of space to do this without risking fiscal sustainability or the currency peg."
Abu Dhabi holds about 6 percent of global oil reserves. The emirate’s non-oil economy has slowed following the plunge in crude prices, as authorities sought to shore up public finances. Non-oil gross domestic product expanded 1.8 percent in 2017 compared with 2.4 percent in the previous year and 5.5 percent in 2015, according to official data.
The government has also merged some of its biggest banks, wealth funds as well as oil companies.
The stimulus program envisages the creation of at least 10,000 jobs for Emiratis in the public and private sectors over five years. Nationals make up about 20 percent of Abu Dhabi’s 2.9 million population and the emirate’s GDP was at about $230 billion in 2017.
A council for advanced industries will be created “to attract and support value-added investments,” while the settlement of outstanding payments due to private contractors will be accelerated, according to state-run WAM news agency. The crown prince also ordered the issuance of dual licenses for companies in freezones to enable them to participate in government tenders.
Abu Dhabi’s stimulus plan follows the announcement last month of a package of measures by Dubai’s ruler and the prime minister of the United Arab Emirates, Sheikh Mohammed Bin Rashid. Abu Dhabi and Dubai are the largest of the seven emirates that make up the U.A.E.
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