Dubai Can Cut Costs 30% After Spending Like `Arabian House,' Khalfan Says

Dubai’s Chief of Police and head of the budget committee Dahi Khalfan said the emirate can cut spending by 30 percent, five months after it pledged to save $1 billion this year in government expenses.

“We have been extremely spoilt,” Khalfan said late yesterday in an interview. “In our budget we spend like an Arabian house, with all its generous hospitality.”

Dubai in March ordered government departments to curb spending this year to reduce the size of the emirate’s expected 6 billion dirham ($1.6 billion) budget deficit. Departments were told to reduce spending by 15 percent to save about $1 billion. Further savings could be made in “construction, events and activities, travel costs, hospitality and official missions outside the country,” Khalfan said.

The government said Jan. 7 that it expects to run a budget deficit for a second year in 2010 even after reducing spending by 6.1 percent. The economy was battered by the global crisis as credit markets seized up, trade declined and real estate prices plummeted.

The slowdown forced Dubai World, one of the emirate’s three main state-owned business groups, to seek a delay on $23.5 billion in debt payments. The emirate received $20 billion in financial support last year from the Abu Dhabi government and the U.A.E. central bank.

The emirate is preparing a medium-term budget plan for 2011 to 2013 that aims to turn the deficit into a surplus, Khalfan said.

To contact the reporters on this story: Camilla Hall in Abu Dhabi at chall24@bloomberg.net; Zainab Fattah in Dubai on zfattah@bloomberg.net.

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